🤖 Nvidia's monopoly margins get competed away by custom and open silicon

“when the market observes that there's a company just printing enormous revenues and profits, they wanna compete with them naturally to get their share of those revenues and profits. And that typically happens in all markets, and the result of that are just decaying margins... I think that that probably decays the Nvidia margin and upside over time.”

“there is a tremendous GPU shortage right now. And that's also what's leading to these almost software like profit margins by Nvidia... And so I think even more than the demand, the profit margins might not be sustainable.”

“You can't have an economy get built in AI when you have year-long waiting lists for H100s and A100s from NVIDIA. That's not possible. So that entire layer as well will get commoditized.”

“in capitalism, when you over-earn for enough of a time, what happens is competitors decide to try to compete away your earnings ... In the case of Nvidia, what you're now starting to see is them over-earn in a very massive way. So the real question is who will step up to try to compete away those profits?”

“So I think Chamath's point is right ... So in networking, a lot of the high-end, high-quality networking companies got beaten up when lower cost solutions came to market later.”

“Right now, their market share is something like 91 percent. That's clearly going to come down, but their moat appears to be substantial. The Wall Street analysts I've been listening to think that in five years, they're still going to have 60-something percent market share.”

“most of the value will accrue is not necessarily a chip company, but in other businesses and traditional industries that can transform themselves using AIs.”

“obviously chips are super crowded, lots of incumbents, lots of people going after it. And the foundation models are very crowded as well.”

“there's some very important nuances around power and around supply chain decisions and technology decisions that, frankly, some people would think are unsustainable. And the more I understand them, I would be in that camp as well”

“But at the same time, what you find now is like every other day when you wake up and read the trades in Techland, you find that there's a company that's gotten seeded with five to 50 million bucks to create a new chip, right? You're also starting to see folks that are working a little bit above the stack and build better compilers, right? Things that will allow you to actually build once, run in many different compute environments. So all of this stuff is starting to happen. At some point, the spread trait will be that Nvidia loses share, even though revenues keep compounding, to these upstarts.”

“So it's a much more complicated product to copy. And then on top of that, they're already in the R&D cycle for the next chip, right? Whatever is going to be the H200 or whatever it is. And so as people try to catch up with H100, they're going to be on to H200. So I think you can make the case that Nvidia has a much better moat than Cisco.”

“I do think that over time, the price of these chips just has to come down. It just doesn't make sense that they'd be so expensive.”

“And what you're seeing now is that Amazon, Google, Microsoft, AMD, Intel, a plethora of startups, Grok, everybody trying to make now different hardware solutions.”