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why would the hardware layer bubble pop if the demand for hardware will still increase (or not change)?

Because everybody and their dog are designing inference chips. Same as tokens, high demand at commodity prices means low profits.

TSMC will still make massive bank because they're the bottleneck. That bank will be squeezed out of companies dependent on TSMC.

> commodity prices means low profits.

I still don't understand how models being commoditised implies the hardware (NVIDIA) itself being commoditised.

What is the exact mechanism that causes NVIDIA's profit to go lower?

Do you mean to suggest that the bubble popping will simultaneously commoditise models as well as inference hardware?

They are completely different layers and have almost zero correlation. I see no indication that hardware also gets commoditised.

everybody and their dog are designing inference chips. Even currently, Google's Tensor can do inference cheaper and more efficiently than a B200. There are dozens of companies designing inference chips; when they hit the market the pricing power of B200 will drop significantly.

And it's correlated with the other bubble dropping because chip cost will matter a lot more once the margin of tokens is tight.

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