104 points by todsacerdoti 1 hour ago
| 75 comments
_fat_santajust now
This article goes more into the technical analysis of the stock rather than the underlying business fundamentals that would lead to a stock dump.
My 30k ft view is that the stock will inevitably slide as AI datacenter spending goes down. Right now Nvidia is flying high because datacenters are breaking ground everywhere but eventually that will come to an end as the supply of compute goes up.
The counterargument to this is that the "economic lifespan" of an Nvidia GPU is 1-3 years depending on where it's used so there's a case to be made that Nvidia will always have customers coming back for the latest and greatest chips. The problem I have with this argument is that it's simply unsustainable to be spending that much every 2-3 years and we're already seeing this as Google and others are extending their depreciation of GPU's to something like 5-7 years.
mnky9800njust now
I really don't understand the argument that nvidia GPUs only work for 1-3 years. I am currently using A100s and H100s every day. Those aren't exactly new anymore.
savorypianojust now
You aren't trying to support ad-based demand like OpenAI is.
linkregisterjust now
The common factoid raised in financial reports is GPUs used in model training will lose thermal insulation due to their high utilization. The GPUs ostensibly fail. I have heard anecdotal reports of GPUs used for cryptocurrency mining having similar wear patterns.
I have not seen hard data, so this could be an oft-repeated, but false fact.
munk-ajust now
I can't confirm that fact - but it's important to acknowledge that consumer usage is very different from the high continuous utilization in mining and training. It is credulous that the wear on cards under such extreme usage is as high as reported considering that consumers may use their cards at peak 5% of waking hours and the wear drop off is only about 3x if it is used near 100% - that is a believable scale for endurance loss.
iancmceachernjust now
They're no longer energy competitive. I.e. the amount of power per compute exceeds what is available now.
It's like if your taxi company bought taxis that were more fuel efficient every year.
bob1029just now
Margins are typically not so razor thin that you cannot operate with technology from one generation ago. 15 vs 17 mpg is going to add up over time, but for a taxi company it's probably not a lethal situation to be in.
mikkupikkujust now
If a taxi company did that every year, they'd be losing a lot of money. Of course new cars and cards are cheaper to operate than old ones, but is that difference enough to offset buying a new one every one to three years?
wordpadjust now
If your competitor refreshes their cards and you dont, they will win on margin.
You kind of have to.
echelonjust now
Nvidia has plenty of time and money to adjust. They're already buying out upstart competitors to their throne.
It's not like the CUDA advantage is going anywhere overnight, either.
Also, if Nvidia invests in its users and in the infrastructure layouts, it gets to see upside no matter what happens.
nospicejust now
> My 30k ft view is that the stock will inevitably slide as AI datacenter spending goes down.
Their stock trajectory started with one boom (cryptocurrencies) and then seamlessly progressed to another (AI). You're basically looking at a decade of "number goes up". So yeah, it will probably come down eventually (or the inflation will catch up), but it's a poor argument for betting against them right now.
Meanwhile, the investors who were "wrong" anticipating a cryptocurrency revolution and who bought NVDA have not much to complain about today.
munk-ajust now
That's the rub - it's clearly overvalued and will readjust... the question is when. If you can figure out when precisely then you've won the lottery, for everyone else it's a game of chicken where for "a while" money that you put into it will have a good return. Everyone would love if that lasted forever so there is a strong momentum preventing that market correction.
KeplerBoyjust now
Also there's no way Nvidia's market share isn't shrinking. Especially in inference.
gpapilionjust now
The large api/token providers, and large consumers are all investing in their own hardware. So, they are in an interesting position where the market is growing, and NVIDIA is taking the lion's share of enterprise, but is shrinking at the hyperscaler side (google is a good example as they shift more and more compute to TPU). So, they have a shrinking market share, but its not super visible.
dogma1138just now
Market share can shrink but if the TAM is growing you can still grow.
blackoiljust now
But will the whole pie grow or shrink?
baxtrjust now
I no AI fanboy at all. I think it there won’t be AGI anytime soon.
However, it’s beyond my comprehension how anyone would think that we will see a decline in demand growth for compute.
AI will conquer the world like software or the smartphone did. It’ll get implemented everywhere, more people will use it. We’re super early in the penetration so far.
Ekarosjust now
At this point computation is in essence commodity. And commodities have demand cycles. If other economic factors slowdown or companies go out of business they stop using compute or start less new products that use compute. Thus it is entirely realistic to me that demand for compute might go down. Or that we are just now over provisioning compute in short or medium term.
marricksjust now
> I no AI fanboy at all.
While thinking computers will replace human brains soon is rabid fanaticism this statement...
> AI will conquer the world like software or the smartphone did.
Also displays a healthy amount of fanaticism.
jwoods19just now
“In a gold rush, sell shovels”… Well, at some point in the gold rush everyone already has their shovels and pickaxes.
krupanjust now
Or people start to realize that the expected gold isn't really there and so stop buying shovels
NewCzechjust now
He doesn't really address his own question.
He's answering the question "How should options be priced?"
Sure, it's possible for a big crash in Nvidia just due to volatility. But in that case, the market as a whole would likely be affected.
Whether Nvidia specifically takes a big dive depends much more on whether they continue to meet growth estimates than general volatility. If they miss earnings estimates in a meaningful way the market is going to take the stock behind the shed and shoot it. If they continue to exceed estimates the stock will probably go up or at least keep its present valuation.
weslleyskahjust now
Indeed, the market as a whole would be affected. But is not NVIDIA more of a software company than a hardware one? This bugs the shit out of me.
They are maintaining this astronomical growth through data centers margins from the design of their chips and all started from graphics related to video games.
dsr_just now
> Sure, it's possible for a big crash in Nvidia just due to volatility. But in that case, the market as a whole would likely be affected.
Other way around: if NVidia sinks, it likely takes a bunch of dependent companies with it, because the likely causes of NVidia sinking all tell us that there was indeed an AI bubble and it is popping.
rwmj1 hour ago
It goes to nearly zero if China invades Taiwan, and that seems like it has at least a 10% chance of happening in the next year or two.
fkargjust now
I agree. It's funny that this is one of the cited reason for the (relative) value suppression of tsmc, but the same factors should apply to Nvidia too.
khalicjust now
Idk the pro china side is getting more and more support, at this rate they’ll vote themselves into mainland
mikkupikkujust now
At this rate, even if they can't get the Taiwanese population to consent, it probably makes more sense to wait anyway to see how low America can sink. The lower America goes, the better their chance for success.
Ekarosjust now
China is capable of taking long term view, beyond single election cycle. And currently USA really seems to be heading down faster and faster.
If something even more drastic happens. China might even attempt unification with some reasoning like protecting Taiwan from USA or other nations.
whatevaajust now
Well, the reality is that most people don't want a bloodbath and it's increasingly looking like external support won't come, so what you gonna do... life is a very complex chess game, gotta play your pieces right.
blackoiljust now
An EU type agreement will keep peace for some time. Remove all trade barriers between two countries, have a treaty preventing any side to be used militarily by third party, no attacking each other and free movement of all vessels through each other's seas. Maybe few more
nebula8804just now
Thats just buying China more time until they can get their chip manufacturing to at least a similar ballpark. Then Taiwan has no cards left to play. China can cripple TSMC depriving the west of chips while they continue onwards.
cjbgkaghjust now
I think Taiwanese elites can be bought, they say they can’t but I think that’s just part of the bargaining for a higher price. The overtures towards a costly and destructive invasion is Chinas attempt at lowering that price. As is the strategy of building up an indigenous chip manufacturing industry. The aggressive rhetoric from China has the added benefit of keeping the US on a self sabotaging aggressive posture.
eagerpacejust now
Going to zero is one potential outcome. Equally plausible is it goes up 10% in a relatively quick battle or diplomatic outcome which ends the geopolitical uncertainty.
rwmjjust now
There's approximately 0% chance that China will ship leading edge wafers from captured TSMC to the West.
eagerpacejust now
This is the beauty of Polymarket. Then bet on it. There are so many more outcomes possible to this conflict than what you see reported in the media. Don't be so reductive.
rbtprogramsjust now
dont be a weird gambling degenerate
fullsharkjust now
What does the US gov't do in response? Wouldn't they throw globs of money at Intel and Nvidia?
bob1029just now
They already have.
utopiahjust now
But then again what won't? Non tech stocks?
rwmjjust now
Yes, lots of other companies would be affected to a greater or lesser extent (even non-tech stocks), but specifically any company that relies on manufacturing all their product in Taiwan will be affected most of all.
zitterbewegungjust now
Industrial military complex and government contractors.
LunaSeajust now
Don't they also depend on chips for a lot of components?
mikkupikkujust now
Probably a lot more from TI and Intel than Taiwan.
utopiahjust now
Jets, tanks, drones and data centers for intelligence services, even design, are full of electronics but what's the share of those not made in Taiwan?
throwaway5752just now
Gold stocks, basic materials, MSCI world and emerging market indexes. Look at their prices and see how very smart people are positioning their money.
immibisjust now
The whole economy will crash. Probably won't be due to China invading Taiwan though. More likely because the president decided to delete their country's world reserve currency status (which is another word for a trade deficit).
bpodgurskyjust now
NVIDIA has been producing Blackwell in Arizona since October. Don't be dramatic.
There would be a supply crunch but a lot of dollars will be shuffled VERY fast to ramp up production.
maxglutejust now
Arizona fabs don't work without TW's many sole source suppliers for fab consumables. They'll likely grind to halt after few months when stock runs out. All the dollar shuffling's not going to replace supply chain that will take (generously) years to build, if ever.
rwmjjust now
They definitely made at least one wafer in Arizona in October.
georgeburdelljust now
Packaging? Assembling onto boards?
blackoiljust now
Can outsource to China. Only partial /s
koolbajust now
> One of the questions of the 2026 acx prediction contest is whether Nvidia’s stock price will close below $100 on any day in 2026.
Maybe I’m missing something, but isn’t this just a standard American put option with a strike of $100 and expiry of Dec 31st?
ameliusjust now
No because if it goes to $99.99, you don't win much. With a prediction contest it is either you win or you lose.
mklyachmanjust now
Not really. American put options will pay differently for 95 dollars vs 99 dollars, while this contract settles to 1 either which way.
baal80spamjust now
checks calendar Ah, NVIDIA earnings call is close - prepare for the inevitable doomer articles.
weirdmantis69just now
It's forward looking P/E is 24-26. That doesn't seem like a huge crash is coming. It could come down a bit but they print money. They also have potential car market and robots coming in.
kwar13just now
This is more of a derivative pricing article and has nothing to do with nvidia really
iancmceachernjust now
The real question is what else will this cause to fall when it does happen.
10xDevjust now
I mean common sense reasoning tells me that if OpenAI has decided to turn into an ad business, the actual return expected from investing into compute isn't going to be nearly as great as advertised.
traceroute66just now
The simple answer to the question:
Nvidia stock crash will happen when the vendor financing bubble bursts.
They are engaged in a dangerous game of circular financing. So it is case of when, not if the chickens come home to roost.
It is simply not sustainable.
PeterStuerjust now
How much of their turnover is financed directly or indirectly by themselves, then leveraged further by their 'customers' to collaterize further investments?
Are they already "too big to fail"? For better or worse, they are 'all in' on AI.
syntaxingjust now
I’m more curious how these “future” contract will work out. Supposedly, a bunch of RAM is paid and allocated for that isn’t even made yet. If the bubble ever pops, the collateral is going to be on the order of 2007 subprime mortgage crisis
bilaterjust now
was expecting some actual reasons presented as to why this would happen. instead got some math.
mvdtnzjust now
People don't actually believe this type of analysis... do they?
bigbuppojust now
Since there's such an interdependence between nvidia and the other companies involed in AI to the point that if one fails they all fail, shouldn't the analysis focus on the weakest link in the AI circle jerk?
tuetuopayjust now
Nvidia is the biggest link, however, I'd wager OpenAI and the likes are big enough to make a significant dent in the mammoth. So yeah, this analysis is sort of a spherical cows in a vacuum situation.
Still, it's interesting the probability is so high while ignoring real-world factors. I'd expect it to be much higher due to:
- another adjacent company dipping
- some earnings target not being met
- china/taiwan
- just the AI craze slowing down
MuffinFlavoredjust now
Worth noting that the implied volatility extracted here is largely a function of how far OTM the strike is relative to current spot, not some market-specific view on $100. If NVDA were trading at $250 today, the options chain would reprice and you'd extract similar vol for whatever strike was ~45% below. The analysis answers "what's the probability of a near-halving from here" more than "what's special about $100." Still useful for the prediction contest, but the framing makes it sound like the market is specifically opining on that price level.
visargajust now
this is gpt, right?
incomingpainjust now
Nvidia PE ratio: 44
I do hope they crash so that I can buy as much as possible at a discount.
4fterd4rkjust now
Them being far above the median PE ratio for the S&P 500 tells you that a future correction would be a discount and you should buy? Please walk me through your logic on this one.
Technical analysis is amazing, it is most refined form of pseudoscience.
immibisjust now
It's easy to predict that a bubble will pop, but there's a variance in the timing of approximately half a human lifetime, and if you don't guess that correctly, you throw away yours.
Everything that can't go on forever will eventually stop. But when?
baal80spamjust now
Well put and clearly explains why "timing the market" is never a good plan.
My 30k ft view is that the stock will inevitably slide as AI datacenter spending goes down. Right now Nvidia is flying high because datacenters are breaking ground everywhere but eventually that will come to an end as the supply of compute goes up.
The counterargument to this is that the "economic lifespan" of an Nvidia GPU is 1-3 years depending on where it's used so there's a case to be made that Nvidia will always have customers coming back for the latest and greatest chips. The problem I have with this argument is that it's simply unsustainable to be spending that much every 2-3 years and we're already seeing this as Google and others are extending their depreciation of GPU's to something like 5-7 years.
I have not seen hard data, so this could be an oft-repeated, but false fact.
It's like if your taxi company bought taxis that were more fuel efficient every year.
You kind of have to.
It's not like the CUDA advantage is going anywhere overnight, either.
Also, if Nvidia invests in its users and in the infrastructure layouts, it gets to see upside no matter what happens.
Their stock trajectory started with one boom (cryptocurrencies) and then seamlessly progressed to another (AI). You're basically looking at a decade of "number goes up". So yeah, it will probably come down eventually (or the inflation will catch up), but it's a poor argument for betting against them right now.
Meanwhile, the investors who were "wrong" anticipating a cryptocurrency revolution and who bought NVDA have not much to complain about today.
However, it’s beyond my comprehension how anyone would think that we will see a decline in demand growth for compute.
AI will conquer the world like software or the smartphone did. It’ll get implemented everywhere, more people will use it. We’re super early in the penetration so far.
While thinking computers will replace human brains soon is rabid fanaticism this statement...
> AI will conquer the world like software or the smartphone did.
Also displays a healthy amount of fanaticism.
He's answering the question "How should options be priced?"
Sure, it's possible for a big crash in Nvidia just due to volatility. But in that case, the market as a whole would likely be affected.
Whether Nvidia specifically takes a big dive depends much more on whether they continue to meet growth estimates than general volatility. If they miss earnings estimates in a meaningful way the market is going to take the stock behind the shed and shoot it. If they continue to exceed estimates the stock will probably go up or at least keep its present valuation.
They are maintaining this astronomical growth through data centers margins from the design of their chips and all started from graphics related to video games.
Other way around: if NVidia sinks, it likely takes a bunch of dependent companies with it, because the likely causes of NVidia sinking all tell us that there was indeed an AI bubble and it is popping.
If something even more drastic happens. China might even attempt unification with some reasoning like protecting Taiwan from USA or other nations.
There would be a supply crunch but a lot of dollars will be shuffled VERY fast to ramp up production.
Maybe I’m missing something, but isn’t this just a standard American put option with a strike of $100 and expiry of Dec 31st?
Nvidia stock crash will happen when the vendor financing bubble bursts.
They are engaged in a dangerous game of circular financing. So it is case of when, not if the chickens come home to roost.
It is simply not sustainable.
Are they already "too big to fail"? For better or worse, they are 'all in' on AI.
Still, it's interesting the probability is so high while ignoring real-world factors. I'd expect it to be much higher due to: - another adjacent company dipping - some earnings target not being met - china/taiwan - just the AI craze slowing down
I do hope they crash so that I can buy as much as possible at a discount.
Everything that can't go on forever will eventually stop. But when?