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Peter Thiel dumps entire Nvidia stake, slashes Tesla holdings amid bubble fears (www.investing.com)
submitted 1 year ago by to c/technology@lemmy.world
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[–] -1 points 1 year ago* (7 children)

Nvidia has near monopoly on semiconductors. Even if Nvidia stocks crash, they will recover. I just trimmed my own shares on Nvidia to cushion the blow.

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  • [–] 9 points 1 year ago (2 children)

    They have a near monopoly on cloud service genAI data center GPUs. They don’t make the semiconductors. They just hand the design for those chip to TSMC and then sell what TSMC makes for them. The vast majority of their revenue right now is coming from selling stuff to new genAI data centers, if those stop getting built, they loose 80% of their revenue. And their current valuation is based on an assumption of an order of magnitude of new such data centers being built year on year.

    I think, that it’s very likely that demand for new such chips is liable to drop to 0 because the capacity of currently extant data center using their chips is already overbuilt for realistic demand. No one other than Nvidia is making money on these data centers, and there is no path to profitability.

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  • [–] 1 point 1 year ago (1 child)

    Thanks for the info. Silly me didn't realise Nvidia doesn't manufacture semiconductors. I thought Nvidia also does because they are one of the leaders in GPU. Speaking of GPUs, at the very least they command the GPU market.

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  • [–] 1 point 1 year ago*

    They’re about a 2/3rds majority in the consumer and workstation market, and that’s not insignificant, but that’s also not a significant part of their revenue by this point, nor is it why their stock makes up a terrifying percentage of the S&P 500.

    If their revenue returned to just being that, they’d basically cease to be a relevant company and their stock price would crater. It’s a decent business to be in, but, it’s not a infinite growth, line goes up forever, business to be in.

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  • [–] 6 points 1 year ago (1 child)

    Even if Nvidia stocks crash, they will recover.

    NVIDIA is up 1500% in two years, with a p/e ratio of 56 in a market that's absolutely ravenous for semiconductors. The idea that the demand for semiconductors can flatline as data center production stales and NVIDIA's valuation will just rebound to its current high is... well, it's highly speculative what NVIDIA is going to do, but I wouldn't bank on the current status quo.

    If nothing else, it's a stock that can safely be described as "overvalued". Selling now isn't a bad idea.

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  • [–] 3 points 1 year ago*

    Yeah, a "safe" PE ratio is around 20. The PE of the entire market is about 28, so investors are basically saying Nvidia is going to grow at double the rate vs the rest of the economy.

    I think that's bonkers, but what's even more bonkers is Palantir with a ~1700 PE ratio. That's ludicrous.

    If Nvidia crashes, I expect it fall to about half it's current valuation, maybe a bit higher, and that's assuming their sales aren't impacted. If the floor falls out from GPUs, then drop that to 1/3 or so.

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  • [–] 8 points 1 year ago (1 child)

    Not really. TSMC has a near monopoly on the advanced fabrication, and ASML has a near monopoly on the lithographic machines TSMC uses. Nvidia is a fab-less designer. Google has its TPUs, and Amazon has some kind of custom chip too.

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