this post was submitted on 28 Sep 2024
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Nvidia isn't going to be holding any bag. They're selling through what they make, and LLMs are just one of many uses for the massively parallel math they're at the forefront of. At most they have to bring pricing down, but they don't own the fab, so if demand did drop (which isn't really all that likely), their costs will go down too. They have contracts in terms of volume and price, but they're not near long term enough to do them more than a blip, and all their investment in developing architecture/tooling has value well outside of LLM nonsense.
Their stock price will tank. They have a $3B market cap because they're selling shovels in a gold rush. Once the gold rush is over, that valuation will go back to where they were three years ago. Probably lower, because the stock market tends to overcorrect on these things.
Companies base their capital on their stock price, and a drop like that can kill companies. Doesn't mean for sure that Nvidia will die, but they could.
Like he said though, being fabless means there's no assets to hold the bag on. It's the fabs that stop getting profitable orders that tank. Worst case is they do layoffs.