AMD YOLO
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I don't think the reckoning will come from AMD stealing Nvidia's market share, it'll come when the hype bubble collapses and businesses start treating neural networks like commodities, running whatever is cheapest instead of the absolute most powerful. AMD is in a great position, because they make both great GPU/NPU hardware and great CPU hardware.
AMD trades at a price to earnings ratio of 99, NVDA trades at a PE of ~38. PE isn't everything when looking at companies, but I don't see other reasons to think AMD is undervalued
[1]: https://ir.amd.com/news-events/press-releases/detail/977/amd...
One of the reasons why different companies have different p/e for a long time is expectation of growth. So META has had a pretty high P/E, but then E has been growing really fast. GM's earnings don't grow so past so the P/E is low. And capital efficiency also hurts P/E.
Disclaimer: I believe stocks represent fractional ownership of an actual company and are ultimately (but not always) valued as such. You can make an argument that financial instruments are just driven by sentiment, supply and demand, and have no correlation to actual reality.
Thought experiment: A and B have the same earnings per share, but everyone expects A to double its revenue going forward and B to go steady. Should shares of A go for the same price as shares of B? If you think so, I can front-run you.
Thought experiment 2: A and B have the same earnings per share, but everyone expects A to halve its revenue going forward and B to go steady. Should they go for the same price? If you think so, I have some bags for you to hold.
The easy answer is that PEG is more appropriate for growing companies and PB is more appropriate for dying companies (since this is HN, I'll also mention that "Team and TAM" is the metric for seed stage). The hard answer is that there is no substitute for modeling the finances of the company and applying a DCF, but your brokerage app can't do that for you so PE/PEG/PB still have their place.
Keep in mind that Nvidia gets to charge astronomical prices because AMD's software is crap. Nvidia charges 2-5x as much for equivalent or worse hardware compared to what AMD is selling. That PE ratio will collapse if AMD ever manages to get its act together.
I'm still astounded AMD has no fired every executive from the CEO down for this obvious multi-year failure.
No it is not actually. They are making insane amounts of money and have very strong forward guidance. With the drop in the last month it is actually cheap (low peg ratio). When the market turns, nvidia is likely to soar once again.
Tell me you haven't looked at Nvidia's financials (especially the margins) without telling me. It basically prints money, now and in the foreseeable future, and all of its products are permanently sold out, even at the insane prices Nvidia is charging.
I think this is the arguable part. The more AI compute becomes valuable, the more reason there is to divest from their software moat. Their hardware is good, but not unassailable. I think their modest (by tech hype standards) P/E is recognition of this.
Their P/E is approximately the same as the rest of the S&P 500 technology sector's average.
I like nvidia, I think they're doing good work, but I don't think their current trajectory is some sort of well-moated flywheel the way some others think it is. Selling shovels during a gold rush can make you rich, it doesn't mean you'll still be selling shovels in 100 years.
This is the best way to put it, it's exactly this.
Those traits are table stakes for running a Fortune 50 company. Before 2019 when the AI boom came out of nowhere, what was going on? Nvidia was an okay company, but not a real over-performer.
Nvidia has been a high margin and great performing business for the last decade. Nvidia had better gross margins than apple by selling gaming GPUs only 10 years ago and that's in a market where you can easily exchange the card in a PCIe slot.
From 2015 till 2022, Nvidia had several years with 50-60% revenue growth. People only look at the recent 2 years and think that Nvidia was "OK" before but I'm invested since 2016 because Nvidia started the growth turbo back in 2014/2015.
Jensen decided decades ago that Nvidia is premium and he positions the company in that position. What many don't get, Apple has only 25% unit share but 75% profit share. So Apple basically concentrates the profit of the Smartphone business. Nvidia will do the same. They had better gross margins a decade ago than AMD has today. AMD might gain unit share but will never gain Nvidia's margins because AMD is a market follower and will never be able to set pricing unlike Nvidia with premium solutions.
Jensen also made CUDA possible. Intel on the other hand killed such projects and also their first GPU project. Intel also didn't invest in OpenAI and so on. Jensen is by far the best CEO and fortunately he doesn't get crazy like Musk does.
What happens to industries that have huge margins? They get compressed by competition. The biggest companies on the planet, literally, are figuring out how to not pay Nvidia those huge margins.
You can't say that in general because it also depends on the moat.
Apple has 75% profitshare in the smartphone market not because they have the best smartphone but because they sell iOS. This is why Apple can charge much higher margins on iPhones then any other smartphone competitor. Competitors use Android and are basically exchangable so their HW is commodity more or less and margins are much lower.
The same will happen with Nvidia. Nvidia will offer complete data center solutions and many other SW/HW solutions for AI and accelerated computing and will charge high margins for that. HW sellers like AMD will sell only chips which will compete with commodity ASICs.
[1] Co-developed proprietary software stacks running on highly proprietary and non-standard hardware targeting very specific workloads.
Then NVDA pumped by trillions and AMD did not and even AMD's crack team of trained denial specialists could no longer stay the course, so they started to turn the ship. But that was only a year or two ago and even the tiniest changes take years in hardware land so the biggest sins are still baked in to the latest chips, but at least the software has started to suck a bit less.
I no longer see 100% of the people who try to build on AMD compute run away screaming. Many do, but not all. That's a change, an important and positive one. If AMD keeps it up maybe they can save us from 80% margins on matrix multiplication after all.
Take a look at their last quarter's income statement graph: https://i.imgur.com/mQwZ5o4.png - Once in a few years I see a Sankey graph looking like that. And it's only growing over the last 10 years.
People think that because a company has grown very large very quickly that it can't grow as much anymore. But on the other hand, there is clear evidence that Nvidia continues to dominate AMD's offerings despite the latter having a competitive product now. So the metric for Nvidia isn't Nvidia vs. AMD but the growth aspect of AI market overall.
The MI300X was lacking in a few areas vs the H100 at the time, overall perf and power efficiency were two big areas. Power efficiency is critical atm, that's seriously the biggest barrier to scaling datacenter rollout right now.
AMDs next card might be better on this front, it might not. But this article doesn't talk to anything about the next card. It's referring to a card from 2023.
I didn’t even notice that. That obviously means George is living in the future.
Time zones are a conspiracy. George is living in the future.
So basically he got 2 MI300s and is currently trying to pump AMD?
Not two cards, two boxes (with 8 cards each I'd assume).
Yeah, that's what I meant by “boxes”
I'd love to see AMD get a multiplatorm product so mature that I can pip install PyTorch on Windows or MacOS with an AMD card (https://pytorch.org/get-started/locally/). But I don't think that their market cap will change quickly even if this happens. Many people have been bought AMD cards in the past because they are cheaper and then died waiting for AMD to have a mature CUDA equivalent. Nobody is going to be quickly buying AMD cards as soon as the software is good- they will gradually change when they replace NVDA hardware, and not everyone is going to make that choice.
If I were making a bet (and I'm not), I'd bet that NVDA is overvalued right now and their growth will slow to correct this but it won't crash, and I'd bet that AMD will gradually increase in value to reward them for software investments, but it won't spike as soon as their software looks good. Neither of these things would I want to put a lot of money on, since they are long term bets, and if you're going long then you might as well just invest in the broader market. And even if I thought that NVDA was going to crash and AMD was going to spike, I still wouldn't bet because I have no idea whether it would happen in the next 6 months or 6 years.
AMD is not undervalued, rather it is Nvidia that is overvalued.
It’s the same processor that is in that new Framework desktop that was on HN recently, but for some reason Framework is not putting it in laptops: https://frame.work/desktop
A lot of readers on this site have a good insight into this and it is a key question financial people are asking without the knowledge many people here possess.
"As fast as AMD tries to fill in the CUDA moat, NVIDIA engineers are working overtime to deepen said moat with new features, libraries, and performance updates."
There's movement to implement CUDA libraries that work on non-Nvidia cards, but I guess adoption could be hindered by legal fears.
What you're looking for is SCALE...
and they are making amazing progress.
Rewriting CUDA programs to run using ROCm is expensive and time consuming. It is difficult to justify this expense when in all likelihood the ROCm version will be less efficient, less performant, and less stable than the original. In the grand scheme of things, AMD hardware is indeed cheaper but it's not that much cheaper. From a business standpoint, it's just not worth it.
Knowing what I know about how management thinks, even if AMD managed to make an objectively superior product at a much better price, institutional momentum alone would keep people on CUDA for a long time.
AMD has been hobbled by the quality of their drivers
Given the way nVidia is printing money, surely it absolutely cannot be a lack of motivation on AMD's part?
This is a very uninformed thought as I have no experience writing drivers, nor am I familiar with the various things supported by CUDA and ROCm. But how is AMD struggling with ROCm compute drivers, when their game drivers have been plenty stable as far as I have experienced? Surely the surface area of functionality needed for the graphics drivers is larger and therefore the compute drivers should be a relatively easier task? Or am I wrong and CUDA has a bunch of higher-level stuff baked into it and this is what AMD struggles to match?
and because they sold less performant hardware.
I mean, aside from GPU compute stuff, it sure looks to me like AMD is executing well. It doesn't seem like they're a bunch of dunces over there. Quite the opposite?
The actual challenger is Cerebras. No need to load (VRAM->SRAM) all the parameters for every batch . But they have yet to prove they can scale and support the custom stack. We'll see.
It seems ADB is just sending more hardware. As far as I know the drivers are still lacking.