NVIDIA Is A Terrible AI Bet

Short version: Nvidia's only moat is in software; AMD already makes flatly superior hardware priced far lower, and Google probably does too but doesn't publicly sell it. And if AI undergoes smooth takeoff on current trajectory, then ~all software moats will evaporate early.

Long version: Nvidia is pretty obviously in a hype-driven bubble right now. However, it is sometimes the case that (a) an asset is in a hype-driven bubble, and (b) it's still a good long-run bet at the current price, because the company will in fact be worth that much. Think Amazon during the dot-com bubble. I've heard people make that argument about Nvidia lately, on the basis that it will be ridiculously valuable if AI undergoes smooth takeoff on the current apparent trajectory.

My core claim here is that Nvidia will not actually be worth much, compared to other companies, if AI undergoes smooth takeoff on the current apparent trajectory.

Other companies already make ML hardware flatly superior to Nvidia's (in flops, memory, whatever), and priced much lower. AMD's MI300x is the most obvious direct comparison. Google's TPUs are probably another example, though they're not sold publicly so harder to know for sure.

So why is Nvidia still the market leader? No secret there: it's the CUDA libraries. Lots of (third-party) software is built on top of CUDA, and if you use non-Nvidia hardware then you can't use any of that software.

That's exactly the sort of moat which will disappear rapidly if AI automates most-or-all software engineering, and on current trajectory software engineering would be one of the earlier areas to see massive AI acceleration. In that world, it will be easy to move any application-level program to run on any lower-level stack, just by asking an LLM to port it over.

So in worlds where AI automates software engineering to a very large extent, Nvidia's moat is gone, and their competition has an already-better product at already-lower price.