So you've been invested in NVDA for 15 years? Because that's how long AMD's been trying unsuccessfully to crack CUDA's secret (OpenCL was initially released in 2009 when it was already clear that nobody wanted to use AMD cards for HPC).
Or how about 5-10 years, when it was clear that everyone was using Nvidia for crypto-related purposes? Heck, even start-of-pandemic when high-end graphics cards were nigh impossible to buy without a 3x markup? (A cool 1500% ROI to date)
This is the sort of thing that's obvious to everyone in hindsight, but it's not always clear in the moment, nor is it clear when the stock has peaked (how many people sold in Nov 2021 as the GPU shortage was starting to ease?).
If you bought NVDA on Jan 1 2006 and held it for 10 years, then you'd have about +100% ROI, or about 7% per year. Not terrible (S&P 500 was closer to +50% ROI over that timeframe), but not amazing (compare this to GOOGL which had a +250% ROI, or AMZN which grew 10x over the same timeframe). Amazon was also an obvious winner in that timeframe due to AWS, right? What about Google / Alphabet? What was unique about its circumstances that warranted it growing twice as fast as Nvidia in that timeframe? Google Plus? Android (it didn't grow 10x like Apple did)? YouTube?
It wasn't clear then that NVDA would have been the winner that it is today, and it's similarly not clear today if NVDA has another 10x gains ahead of it, or if it's already peaked. Or, for that matter, what the next big tech winner will be. (I bet it already exists. It might even already be publicly traded.)
edit: also, if I had perfect predictive knowledge of the financial markets, I'd have put $1000 on BTC back in 2011 when it was about $2 a pop, and sold at any of the recent peaks for $3+ million. There is literally no technical justification for those returns other than market speculation.
They mentioned the timeframe as 2006-2016. I think they were purposely omitting the recent gains to highlight their point about the unexpectedness of NVDA's stock jump.
Exactly. NVDA wasn't clearly a winner until the past 2 years or so. From Jan 1 2016 to Jan 1 2020, it grew by 8x -- certainly impressive (70% year-over-year growth). From there until the ChatGPT announcement in Nov 2022, it maybe doubled once more (peaked from the crypto-induced GPU shortage, then was falling). But from there on out, in the course of 20 months, it's skyrocketed 8x (an absurd 250% year-over-year growth).
So sure, if you correctly guessed that ChatGPT was going to spur a ton of interest in Nvidia hardware, then you could have made lots of money in not very much time. Meanwhile, to me at the time, this seemed like an incremental release on top of OpenAI's prior GPT models, none of which were earth-shattering paradigm shifts. I certainly did not anticipate the surge of all these AI startups that wanted to build on top of it, or the industry shift to try to use GenAI to solve all of the world's problems.
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If I got the math wrong anywhere, it was the magnitude of investing that $1k in BTC back in 2011 -- I'd have $30-35 million to my name, minus taxes for long term capital gains. Even then, it wouldn't have been clear to me at what point I should sell -- mid 2017, when that investment would have grown to $1 million? After it peaked in December 2017 at $20k, it lost 80% of its value -- what reason would I have to expect that it'd grow to more than 3x its previous peak, just a couple years later?
The bet I described was that GPUs would be more and more relevant in modern computation, and that Nvidia sells the best GPUs and the best toolkit for writing general purpose code on GPUs. GPT is just the latest on a large chain of applications.
Or how about 5-10 years, when it was clear that everyone was using Nvidia for crypto-related purposes? Heck, even start-of-pandemic when high-end graphics cards were nigh impossible to buy without a 3x markup? (A cool 1500% ROI to date)
This is the sort of thing that's obvious to everyone in hindsight, but it's not always clear in the moment, nor is it clear when the stock has peaked (how many people sold in Nov 2021 as the GPU shortage was starting to ease?).
If you bought NVDA on Jan 1 2006 and held it for 10 years, then you'd have about +100% ROI, or about 7% per year. Not terrible (S&P 500 was closer to +50% ROI over that timeframe), but not amazing (compare this to GOOGL which had a +250% ROI, or AMZN which grew 10x over the same timeframe). Amazon was also an obvious winner in that timeframe due to AWS, right? What about Google / Alphabet? What was unique about its circumstances that warranted it growing twice as fast as Nvidia in that timeframe? Google Plus? Android (it didn't grow 10x like Apple did)? YouTube?
It wasn't clear then that NVDA would have been the winner that it is today, and it's similarly not clear today if NVDA has another 10x gains ahead of it, or if it's already peaked. Or, for that matter, what the next big tech winner will be. (I bet it already exists. It might even already be publicly traded.)
edit: also, if I had perfect predictive knowledge of the financial markets, I'd have put $1000 on BTC back in 2011 when it was about $2 a pop, and sold at any of the recent peaks for $3+ million. There is literally no technical justification for those returns other than market speculation.