alt Hacker NewsJensen has created more shareholder value than nearly any human on earth. Significantly more than Elon, with the key distinction that Jensen has distributed much more of that shareholder value than Elon has through stock options to employees and appreciation of public stock (it’s one of the reasons he’s worth 150Bn vs 1Tn).
I think the real risk for the economy, the AI industry, and the US is that Nvidia becomes JUST another company. Nvidia losing 50% of its value from its peak means it’s still a $3 trillion company. What if it loses 90%? Then it’s the size of Intel which we generally agree is an important part of the industry.
Nvidia can afford to invest in companies because the stock is so high and capital is incredibly abundant. Those companies buy Nvidia products at the 50% NET margins. Nvidia gets a ton of cash. Earnings are crazy. But if this cycle stops and efficiency wins in the market (lower margins, more competitors, more options), then Nvidia goes back to where they were which was a Tier-1/2 supplier battling for margin and market share. That is not a $6T company.
Replies
What's the downside of that for the economy? It seems like it would be the market becoming more efficient, cutting down on margins and so on. Bringing Nvidia back to earth might open up cheaper hardware for other companies to work with and accelerate AI anyway.
Doesn't this situation demonstrate how bonkers it is to pin the fortunes of the stock market and potentially the entire economy on the behavior of one person?
This could've been said of Cisco in the telecom bubble days. Or Nortel. Or a handful of other key players who were all inflating that bubble and playing games with their financials that made the bursting of the bubble worse.
Pumping billions of dollars, the source of which is obscured, into it looks like a cut out, is not just a national security problem. It undermines confidence in the numbers that you claim are the basis of shareholder value.
what kind of argument is this?
the stock value just represents what people think the company is (or will be) worth, them selling products at 50% margin is what brings the money, the stock value doesn't give NVIDIA extra cash (unless they're selling or leveraging their own stock reserves to get even more cash?). And definitely shareholder value is not the economy.
and also, how is the efficiency bad now? surely that allows for innovation and other companies and people to get cheaper hardware (assuming they somehow have to lower their margins because Jensen left, still don't get that argument)
NVDA losing 90% would bankrupt the entire AI sector and plunge US into a deep recession.
It's not just a chip company. Those trillions of value represent bets across the entire economy. When the casino goes bankrupt, all bets are off.
Giving Jensen credit for creating literally all of the value from Nvidia seems really over the top. He happened to be running the biggest GPU company during the biggest GPU boom ever. Sure he had an impact on the numbers and the timing, but if Jensen had never been born someone else would be heading a giant chip company around this period of time that saw it's stock take off like a rocket ship. This would happen even if the counterfactual CEO was incompetent.
Nvidia losing 50% of its value from its peak means it’s still a $3 trillion company. What if it loses 90%? Then it’s the size of Intel which we generally agree is an important part of the industry.
> Jensen has created more shareholder value than nearly any human on earth.
Nonsense. Nvidia's employees created that value, not Jensen. Jensen personally is all but certainly responsible for almost none of the value created, just like in every other company. CEO worship is absurd.
Like it's an extremely common sentiment when working for a large company to look at the SVP or CEO and go "that person is a dumbass, everyone in charge is a dumbass". Yet when looking at other companies somehow we forget about that and put the companies success on the CEO or top level execs. Instead of remembering "no, it's probably the small army below them figuring out how to manage upwards to prevent the idiot in charge from tanking everything"
JH was an actual founder with technical know-how, not some silver-spoon grifter who came in, bought other peoples' companies, and then pretended to be a genius. He has more in common with Steve Wozniak than Elon Musk (but some huge differences too).
Nvidia is not going to be able to replace JH easily. Their corporate structure was fairly flat. Either everybody was working independently or everybody was looking to JH for oversight. The latter is more likely. Nvidia's CFO is stepping in as interim CEO but, if, a couple weeks ago, you'd told me that Nvidia needed to be more money focused, I'd have laughed my butt off. Neither an ex-CFO nor an off-the-shelf CEO is what Nvidia needs if they want to avoid a huge shakeup of their structure and risk stalling for a bit.
If Nvidia stalls, other chip manufacturers are poised to step in. AI, as a field, will be fine even if the bubble pops. It's possible this might create a pause right when it will be useful.
If efficiency is a risk for the economy then the economy is of course. Hopefully the correction can be soft and not a catastrophic pop. Maybe a slight cooling of Nvidia, caused by isolated factors, can help without crashing the whole sector.
Sounds like a perfect fix for inflationary pressures to be honest - at least when it comes to assets and equities. Takes trillions off the board, stops the money machine cycle, and only impacts equity holders. Probably missing something here but that seems about right to me.
surely the telegraph was the biggest value creator ever?
Monopolies are a plague on healthy markets.
I'm a normal person with a beating heart and conscience, so I don't give a damn about how much shareholder value someone has ever created, and I never will.
And poof just like that the myth of the founder led company being untouchable has imploded. All other founder led CEOs will be watching this closely.
Alternatively if the company tanks the board will have a reckoning similar to the OpenAI debacle.
On paper, sure.
Let's find out if the money exists next week when everyone tries to cash in.
Jensen created some shareholder value, but in reality it's the AI labs (and crypto before that) that led to the huge valuation. None of this is his making, he just got lucky.
Any other idiot in his place would have made the same amount of money.
The stock market isn't the economy.
I don't care about shareholder value. There is Schaudenfreude in seeing an AI/tech billionaire go down.
What exactly have any of us regular people gotten from more Nvidia shareholder value? More expensive chips and AI slop?
Jensen has created more shareholder value than nearly any human on earth.
I think the real risk for the economy, the AI industry, and the US is that Nvidia becomes JUST another company.
...
But if this cycle stops and efficiency wins in the market (lower margins, more competitors, more options), then Nvidia goes back to where they were
What on earth are you talking about. The exponential growth in the 1990s, percentage wise, far outpaced the AI bubble. Go look at Intel, Microsoft, lucid, etc from the dot com boom. This is the problem with 20-somethings’ hot takes on the market: no history.
This slavish devotion to shareholder value above all else is pretty gross.
He cheated, multiple times, he is scum for that.
He seems to have consorted with a spy and evaded export bans. He is a criminal for that.
Oh, but he made people a lot of money? All good! /s
Throwing all morals and ethics out the window because of the eCoNoMy is insane.
The cult of personality around CEOs is unhealthy.
And we get to buy GPUs again in normalized prices. How's that bad for the economy exactly?
Nvidia stock price is now lower than it was a year ago. Has been declining for about 6 months, highly volatile, with a step sell off starting a month ago.
Cisco's stock price was similarly very high during the dotcom boom, but then collapsed, and took 17 years to build back up.
The thing people keep forgetting is nvidia makes graphics cards. Not CPUs, not a range of different products. Graphics cards. With a software moat. Their only business advantage is that people currently want a lot of their graphics cards and are currently dependent on their software. All that can be competed against. China is already putting out their own cards. Google has TPUs. AMD makes both CPUs and GPUs. The memory prices will soon fall as more capacity comes online.
It's practically a certainty that this stock price will keep falling. They're valuable, but in a competitive market, likely not 10x more valuable than their $17 stock price in 2022. When they fall harder so will the AI economy.
It would be a great thing for the economy. So many sectors are underinvested right now because capital has been stowed away into these companies valuations. Imagine 6T dumped in any other industry and it would be a generational step change event. For reference that's ballpark like 3x the valuation of the entire American biotechnology industry, all in one company. Talk about opportunity cost.