It's a good time to be the arms dealer for the AI boom Nvidia kicked the can labeled "AI bubble" down the road on Wednesday. "There's been a lot of talk about an AI bubble," said CEO Jensen Huang during the AI arms dealer's third-quarter earnings call. "From our vantage point, we see something very different." Huang marked the occasion by noting, in a statement, that "Blackwell …
...as long as you get out before they pop.
So if you believe Huang, stop worrying. If you do not, keep you eyes glued on those numbers and get ready to pull your cash out real quick. Let's hope it isn't during downtime - a Cloudflare issue or a Microsoft update that doesn't go well. Because that might be expensive.
In other words, do ya feel lucky, punk?
...as long as you get out before they pop.
Knowing when would be worth gazillions, :)
I was wondering whether the dynamics of real bubbles could be used to model financial ones. I imagine there are financial analogies for surface tension, bubble thickness, bubble diameter/surface curvature, surface evaporation etc.
Poetic if you were to use an NVidia GPU to run such a model that ultimately predicts when the bubble bursts.
I suppose you could use actual bubbles to perform an analogue computation† by adjusting the bubble solution composition, atmospheric composition, temperature, pressure and humidity. Champagne science?
† anyone remember analogue (and hybrid) computers ?
Absent the vast demand of the AI builders, then there will be massive over-capacity in GPUs, RAM, and certain networking components. In that situation makers need to reduce prices to make more sales, reduce capacity to lower their costs, and find new or reinvigorate old markets.
There will also be a fair amount of unsold inventory, and that will need shifting quickly for a discount (a) because the makers and supply chain suddenly needs cash where AI-cash has dried up and (b) because the depreciation is too severe to hold on to it hoping for demand to revive. Gamers might hope, but need to accept that some of that kit won't readily lend itself to other uses, eg an Nvidia GB200 NVL72 isn't going to fit your average gaming rig. It will take AMD and Nvidia a while to rebuild the gaming processors business that they've been treating with contempt for a good few years now, and they'll need their boards to take a view on what the longer term GPU/CPU/memory market is, what that means for the shape of their business, and how to go forward - none of those steps will be quick. The (probable) massive damage to shareholder value may even see the likes of Jensen booted out - "you told us there was no bubble, waaaaaahhhhh!"
I suspect the few beneficiaries of the AI bubble bursting will be any academic or research organisations looking to buy a supercomputer at just the right time.
Yes, probably a few months after the bubble has popped, RAM manufacturers will realize that they made too much of it and now need to get rid of it and scale down production. At that point, prices will likely fall. We don't know how long that will take to arrive, though, and there are a couple options which don't give you the nice low price from a glut. If the RAM manufacturers correctly predict it, they'll lower production in time and there will be no glut. The shortage pricing will decline a bit, but that's all.
If the AI bubble doesn't pop as much as it slowly deflates, then it could be even less dramatic. I think there is a chance of that. For long-term economic performance, that would be worse, though for short-term investors it would be a bit better, but as long as people still harbor hopes for a new model meaning massive economic benefits and are willing to keep pumping in money, a lot can escape and still have running companies. The bubble popping idea works if many people decide they made a huge mistake and give up, and that's an option, but there's also a possibility that people do that at different times and the companies, while they would no longer grow exponentially, could stay functional for some time.
"Nvidia kicked the can labeled "AI bubble" down the road on Wednesday."
Well put. Because that's all this is: the bubble is moving down the road. But further down the road it's still going to burst.
It's not that there's no AI bubble. It's just that everyone expected to start seeing the end of it now, and it's not in sight yet. So the financial world breathes a sigh of relief and continues on its merry way... towards the inevitable AI bust.
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