The Gold Rush and Those Who Sell Tools » Enrique Dance

My column this week in Invertia is called “Nvidia: Where’s the Ceiling?” (pdf), and is motivated by an almost vertical and ascending line that describes the evolution of the company’s prices in the midst of the frenzy over the introduction of artificial intelligence and machine learning at all levels and in all sectors.

Nvidia’s valuation this week surpassed Amazon’s and could be on the verge of surpassing Alphabet to become the fourth or even third most valuable company in the United States. The company I recently wrote about is one of those that spends thirty years making decisions that are hard to explain to stock market analysts obsessed with short-termism, only to finally become successful “overnight.”

Yes, the Nvidia of Jensen Huang, a Taiwanese immigrant who arrived in the country at the age of nine, was able to predict many years ago that the need for computers would at some point increase dramatically, and that the logical thing to do would be to run these common target computing processes in GPUs ( GPU), and that to reach this point it was necessary to obsessively concentrate R&D efforts without allowing oneself to be distracted by siren songs such as the opportunities presented by market growth. smartphone.

Today, Jensen Huang, in addition to being ranked 21st on the Bloomberg Billionaires Index, is a manager with a reputation as a visionary who has had to watch a group of analysts do their job no better than a blindfolded monkey throwing darts at Wall denigrated their efforts and recommended not to invest in their company. The Nvidia case is a demonstration of why we should not trust financial analysts and why, when we listen to them, the market becomes a perverted mechanism that reinforces the worst in society and disdains true innovation, which takes time and effort to achieve.

Nvidia is the absolute star of the market right now, and to try and compete with it, there are those who are considering financing rounds of five to seven billion (European, that is, millions of millions) dollars, which is not even remotely a guarantee of success. Juan himself claims that this is nothing more than a huge exaggeration. Here’s what it takes to know your business. Meanwhile, his company is announcing a line of chips tailored to each company’s needs that could enable even greater growth.

No, Nvidia’s stock price has no clear ceiling today. In the midst of the AI ​​gold rush, where all the companies know that if they don’t implement it, they won’t be able to be competitive, into a company selling the best blades and the best sieves. the ones you actually know you need if you want to get serious about prospecting for precious metals. Those who sell the tools always stand to gain the most in any technology distribution process, and Nvidia is a great example of this.

This article is also available in English on my Medium page “Nvidia: The sky’s the limit.”