If the AI market gets 10x bigger, and GPU work gets 50% smaller (which is still 5x larger than today) - but Nvidia is priced on 40% growth for the next ten years (28x larger) - there is a price mismatch.

It is theoretically possible for a massive reduction in GPU usage or shift from GPU to CPU to benefit Nvidia if that causes the market to grow enough - but it seems unlikely.

Also, I believe (someone please correct if wrong) DeepSeek is claiming a 95% overall reduction in GPU usage compared to traditional methods (not the 50% in the example above).

If true, that is a death knell for Nvidia's growth story after the current contracts end.

Nope. Anything inheriantly serial is better off on the CPU due to caching and it's architecture.

Many things that are highly parallizable are getting GPU enabled. Games and ML are GPU by default, but many things are migrating to CUDA.

You need both for cheap, high performance computing. They are different workloads.

  No - because this eliminates entirely or shifts the majority of work from GPU to CPU - and Nvidia does not sell CPUs.

Whether your new coprocessor or instructions look more like a GPU or something else doesn't really matter if we are done squinting and calling it graphics like problems and/or claiming it needs a lot more than a middle class PC.

CPU chipsets have borrowed video decoder units and SSE instructions from GPU-land, but the idea that video decoding is a generic CPU task now is not really true.

Now maybe every computer will come with an integrated NPU and it won't be made by Nvidia, although so far integrated GPUs haven't supplanted discrete ones.

I tend to think today's state-of-the-art models are ... not very bright, so it might be a bit premature to say "640B parameters ought to be enough for anybody" or that people won't pay more for high-end dedicated hardware.

Depends on what form factor you are looking at. The majority of computers these days are smart phones, and they are dominated by systems-on-a-chip.

If stock market-cap is (roughly) the market's aggregated best guess of future profits integrated over all time, discounted back to the present at some (the market's best guess of the future?) rate, then increasing uncertainty about the predicted profits 5-10 years from now can have enormous influence on the stock. Does NVDA have an AWS within it now?

Cisco in 1994: $3.

Cisco after dotcom bubble: $13.

So is Nvidia's stock price closer to 1994 or 2001?

It’s very shortsighted to think we’re going to need fewer chips because the algorithms got better. The system became more efficient, which causes induced demand.

Most likely, consumer surplus has gone up.

Not only are 10-100x changes disruptive, but the players who don't adopt them quickly are going to be the ones who continue to buy huge amounts of hardware to pursue old approaches, and it's hard for incumbent vendors to avoid catering to their needs, up until it's too late.

When everyone gets up off the ground after the play is over, Nvidia might still be holding the ball but it might just as easily be someone else.

Anyone currently invested is presumably in because they like the insanely high profit margin, and this is apt to quash that. There is now much less reason to give your first born to get your hands on their wares. Comcast, Google, T-Mobile, Verizon, etc., and especially those not named Google, have nothingburger margins in comparison.

If you are interested in what they can do with volume, then there is still a lot of potential. They may even be more profitable on that end than a margin play could ever hope for. But that interest is probably not from the same person who currently owns the stock, it being a change in territory, and there is apt to be a lot of instability as stock changes hands from the one group to the next.

I'm invested in Nvidia because it's part of the index that my ETF is tracking. I have no clue what their profit margins are.

That would be an unusual situation for an ETF. An ETF does not usually extend ownership of the underlying investment portfolio. An ETF normally offers investors the opportunity to invest in the ETF itself. The ETF is what you would be invested in. Your concern as an investor in an ETF would only be with the properties of the ETF, it being what you are invested in, and this seems to be true in your case as well given how you describe it.

Are you certain you are invested in Nvidia? The outcome of the ETF may depend on Nvidia, but it may also depend on how a butterfly in Africa happens to flap its wings. You aren't, by any common definition found within this type of context, invested in that butterfly.

The ETF is just one more layer of indirection. You might like to read https://en.wikipedia.org/wiki/Exchange-traded_fund#Arbitrage... to see how ETFs are connected to the underlying assets.

You will find that the connection between ETFs and the underlying assets in the index is much more like the connection between your Robinhood portfolio and Nvidia, than the connection between butterflies and thunderstorms.

[0] At least for its stocks. Its bonds are probably held in different but equally weird ways.

Technically, but they extend ownership. An ETF is a different type of abstraction. Which you already know because you spoke about that abstraction in your original comment, so why play stupid now?

An ETF typically holds the underlying assets, and you own a part of the ETF.