NVIDIA: The Core of the AI Industry
One of the most notable companies in today’s stock market is undoubtedly NVIDIA. NVIDIA has a near-monopoly on the AI chips essential for companies aiming to build and deploy AI models. These chips are crucial for AI infrastructure, especially in data center servers, leading many companies to purchase NVIDIA’s chips.
As a result, NVIDIA’s stock has been on a continuous rise. As of the closing on July 5, it was recorded at $125.83, a 258% increase from $39.23 a year ago. However, recent stock prices have been somewhat stagnant. Opinions are divided between those who believe “there’s no stock like NVIDIA” and those who think “other AI stocks will rise.”
David Chan, a partner at the legendary venture capital firm Sequoia Capital, and Angela Strange, a partner at a16z, have expressed differing views on AI investments. Today, we will examine future AI stocks through their perspectives.
David Chan of Sequoia: “AI Investment is Like Pouring Water into a Bottomless Pit”
David Chan, a partner at Sequoia, posed the question “Does investing in AI yield profits?” in his September 2003 article titled “The $200 Billion AI Question.” He argued that the massive costs involved in AI infrastructure, particularly data center GPUs, outweigh the actual profits generated.
Recently, Chan raised “The $600 Billion AI Question,” doubling the total cost of AI infrastructure based on NVIDIA’s annual revenue predictions. According to his calculations, half of the AI industry’s costs come from NVIDIA chips, while the other half includes energy, buildings, backup generators, etc. Companies purchasing AI chips must also generate double the margin to make a profit.
In conclusion, Chan predicts that AI infrastructure investment will remain a bottomless pit for the time being. He foresees intense price competition as new AI cloud players continue to emerge.
Angela Strange of a16z: “AI Companies Have Already Emerged”
Angela Strange, a partner at a16z, offers a different perspective. She believes AI is already causing significant changes, and despite its high cost, many companies are adopting AI. Strange argues that AI will drastically reduce productivity costs and transform how tasks are performed.
She emphasizes the value of AI as a cost-saving tool. AI software increases team efficiency and replaces repetitive tasks, allowing companies to achieve more. She cites examples of AI applications in various roles, such as compliance analysts, sales development representatives, medical coordinators, and loan officers.
Strange also believes that new AI tools will be a driving force for productivity. Unlike previous software, which was twice as good as some personnel, new AI tools will be ten times better.
Conclusion: The Future of AI Investment?
David Chan warns that AI infrastructure investment may be a bottomless pit, while Angela Strange argues that AI is already significantly transforming companies. Their views differ, but both provide insights into AI investment. Which opinion do you agree with? What do you think the future holds for AI investment?
Future AI investments will greatly impact our lives. Think deeply about AI investment and develop your investment strategy. The right strategy starts with setting the right goals. Use the opinions of Chan and Strange as references to formulate your AI investment strategy.
Reference: Sequoia Capital, “The 600 Billion Dollar AI Question”