I think you're right because yes they make the hardware behind the products, but they're not making the products, which is where you'd think the actual money should be.

On the other hand, it will be interesting to see how much money there is in "intelligence" the more abundant it becomes.

Who is competing with Nvidia right now? if nobody is then they can basically dictate their own price with the kind of demand there is right now for GPUs.

There is not that much product to be made just like there wasn’t that much gold to be mined

This is dot-com rush all over again, but it's worth keeping in mind the dot-com rush (with some poetic license) gave us Google, Amazon, Meta, and much of the value of modern Apple+Microsoft.

Those are five of the top ten companies in the world by market cap.

Not many more dot-coms on the list of top 100 though:

https://companiesmarketcap.com/

It was a winner-takes-all market with a few big winners and a lot of losers.

There's a lot of product to be made. AI is already transforming a lot of businesses. It's too early to tell who the big winners will be, how the market will be structured, or what will happen.

I suspect, in the metaphor, NVidia is the Cisco or the Sun Microsystems. They power the gold rush. Cisco is #60 on biggest companies, and Sun died 14 years ago. I suspect NVidia is now overvalued, but I suspect it should still be highly-valued.

I suspect things will self-correct if AMD, Intel, or one of the startups gets software in shape. The problem is that as much as NVidia can maintain competitive advantage, competition is likely to cap profit margin. If Intel is 30% less efficient than NVidia in compute-per-dollar, than NVidia's profit margin can be at most 30% more than Intel.

The way I see it right now, the situation with NVIDIA and AI companies is like shovel sellers and gold miners. Picking which gold miner is going to strike gold and which ones will go bust is difficult to tell, but knowing that all of them will need shovels/mining equipment means that shovel sellers are a safe but extremely rewarding bet for the next little while.

Something Something Dot Com Crash 2.0