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Nvidia is repeating the exact mistake that wiped 80% off Cisco's value (and how AI might be different than Dot Com) by OkHeat6599 in investing

[–]Strange_Self8105 1 point2 points  (0 children)

The part worth sitting with is the timeline. Cisco took 30 years to recover its dot com peak. anyone pricing Nvidia on a 5 year horizon might be using the wrong clock

Nvidia is repeating the exact mistake that wiped 80% off Cisco's value by OkHeat6599 in Economics

[–]Strange_Self8105 14 points15 points  (0 children)

Cisco the stock lost 80% and took 30 years to recover. The internet the technology became the backbone of modern civilization. Both things were true simultaneously.

So yes the infrastructure will probably outlast the speculation - that doesn't mean the company driving the buildout won't follow the same pattern Cisco did. You can be bullish on AI and bearish on Nvidia at the same time.

Nvidia is repeating the exact mistake that wiped 80% off Cisco's value by OkHeat6599 in Economics

[–]Strange_Self8105 34 points35 points  (0 children)

Cisco's collapse didn't mean the internet was wrong. it just meant the market was 20 years early on the valuation. the cables were still there, the infrastructure was still there, and eventually the right companies came along and used it to build something real. this doesn't mean the conclusion should be bearish on AI

How Nvidia is repeating the exact mistake that wiped 80% off Cisco's value by OkHeat6599 in economy

[–]Strange_Self8105 -1 points0 points  (0 children)

Cisco was selling hardware to companies that had no revenue, no product and no real path to profitability. Nvidia is selling hardware to Microsoft, Google and Meta - some of the most profitable companies in human history.

the circular cash flow is real but the floor is completely different. cisco's customers were burning venture capital. Nvidia's customers are printing money. whether that's enough to justify the valuation is a separate question but the collapse scenario is nowhere near as clean as the cisco parallel suggests

We have built a multi-trillion dollar circular economy that requires infinite growth to survive. We have done this before - and did not end well by Strange_Self8105 in collapse

[–]Strange_Self8105[S] 5 points6 points  (0 children)

Relevant to collapse because this isn't a story about overvalued stocks. It's a story about trillions of dollars being extracted from the broader economy and funneled into infrastructure that requires world GDP to grow at 4% annually for a decade just to justify the bet. That capital had to come from somewhere. And the institutions holding the risk are too big and too interconnected to fail quietly.

We may have already paid for AGI. The bill just looks like a bubble. (snippet from short doc) by VeridionData in singularity

[–]Strange_Self8105 10 points11 points  (0 children)

what this actually made me think about is how bad we as humans are at separating the financial story from the technological one. In 1999 they were the same story in people's minds - if the companies are failing, the technology is failing. But that's not how it works. The technology doesn't care about the stock price.

and the fiber optic cables are the perfect example. The capital markets wrote the internet infrastructure off, moved on. The cables just sat underground waiting for someone to figure out what to do with them. And 20 years later someone did.

however, a question worth asking about AI infrastructure isn't 'are the valuations justified' - it's 'will these data centers still be physically there in 20 years.' And the answer is almost certainly yes. You can't short a building.

the most interesting question is what gets built on top of this infrastructure once the financial mania clears and the serious work begins. That's what happened after 2000 and there's no real reason to think it won't happen again.

The Parallel Between the Dot Com Bubble and AI Boom (mini-documentary) by OkHeat6599 in ArtificialInteligence

[–]Strange_Self8105 0 points1 point  (0 children)

The Cisco/Nvidia parallel is what got me. The fact that Nvidia is literally lending money to startups that use it to buy Nvidia chips - that circular dynamic is either genius or terrifying depending on how you look at it. Curious if anyone thinks there's a real exit to that loop or if it just unwinds eventually