Roses by any other name smell sweet, but NVIDIA smells like money.
A joke circulating on financial advisors’ desks this week involves a young girl asking her father for his name.
“Dad,” says the daughter. “Why is my middle name Rose?”
“Because Mom loves roses more than anything,” Dad replies.
“That’s kind of you, Dad. Thank you. I love you,” she says.
“I love you too, Nvidia.”
At the end of the session, the market erupted in joy. Chip maker Nvidia The company announced profits that exceeded expectations. Goldman Sachs called it the world’s most important stock. There was widespread speculation that Nvidia’s poor quarterly results could cause the entire market to fall.
Nvidia stock was initially indicated to be lower in after-hours prices as traders tried to determine whether the company beat or underperformed expectations. Is this a buy the rumor, sell the news moment? But by Thursday morning, the verdict was clear. Nvidia stock rose 16% on Thursday. The broader market rallied.
To buy or not to buy: The parabolic paradox
Nvidia stock is rising 16,000 percent This has been the case for the past 10 years or so. Last year he was available for $120 in October. 540% increase In just a few months. This kind of parabolic rise should be scary. But, as is often the case, it appears to be attracting even more investors who fear missing out on the next big opportunity.
Nvidia is described as a maker of sieves, shovels, and pickaxes. Artificial intelligence gold rush. Its largest customers are some of the largest and most profitable companies in the world. Microsoft, Meta, Amazon, Alphabet. The biggest short-term risk the company appears to face is that these companies begin to drive down the price Nvidia charges for its chips, a price that gives the company a 77% gross margin.
Title page of A Description of California and the Wonderful Golden Region, published by J.B. Hall in 1849.
Of course, there are also more serious risks. The first one, The artificial intelligence boom may collapse. Expectations for this technology are currently very high, including the idea that it could usher in a new era of economic growth through increased productivity. If these expectations prove unfounded, demand for AI production and Nvidia products may not be as strong as investors currently assume. This is not the first time that a promising technology has sparked a speculative frenzy that later sank into losses for South Sea investors.
Much Ado About Wokery: The Political Quagmire of AI
This week there was a glimpse of trouble on the horizon. Alphabet unravels Gemini generation AI. When asked to generate images of historical figures and moments, Gemini instead generated visions from the woke fever dreams of the far left.
White people have been erased from history and from contemporary emotional states.The founding fathers were black, the pope was a woman, and The Nazis were portrayed as a multicultural army.. This AI responds to a request for a photo of a “happy white woman” and immediately creates an image in response to a request of a “happy black woman,” yet creates content based on race and ethnicity. I made derisive claims that I had no intention of doing so. ” Even stranger, when asked for a photo of an 18th century American settler, a photo of a Native American was produced.
We conducted our own experiment and asked Gemini to create the following image. central bankers lower interest rates Even though inflation was high. The reaction to this was that this was a no-no, as it risked creating negative stereotypes about central bankers. We went a step further and asked for images that poke fun at the President of the United States. This was abolished on the grounds that we should have more respect for our leaders.
Alphabet likely can correct this kind of nonsense, but it points to a serious problem with AI. If the creator of an AI application claims that: “Responsible” AI means political control, censorship, fabrication, and bias, the usefulness of AI will be limited. Leaving this stimulant unchecked will likely trigger restrictions and regulations aimed at preventing AI from forcing left-wing views on users. If that happens, demand for AI chips could fall far more than currently expected.
It can be uncomfortable Corporate exposure to China. Although the percentage of data center sales going to China has declined, the company remains reliant on purchases from China. This situation could become unsustainable in the long term if China decides it does not want to rely on non-Chinese chips for AI chips, or if the US imposes further restrictions on sales to China. There is. Or if both of these things happen.
As You Like It: Thoughts on Nvidia’s Monetary Policy
One of the broader implications of Nvidia’s quarterly results is that it gives the impression that the stance of monetary policy is less severe. Major companies are pouring huge amounts of investment into technologies they are developing, sending stock prices soaring.it is Signs of easing policy Rather than being restrictive. At the very least, it suggests the Fed is in no hurry to cut rates in the near future.
