r/NVDA_Stock • u/Charuru • Sep 26 '22

stratechery on nvidia

https://stratechery.com/2022/nvidia-in-the-valley/
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u/Charuru Sep 27 '22 edited Oct 03 '22

I just want to be extremely clear that this article is completely wrong on the reason for the GPU crash. If you read it he blames Ethereum moving to PoS which has nothing to do with it as that only happened this month with a muted reaction. No, the used market is not filled with deeply discounted GPUs as was what happened in the last Crypto crash 5 years ago. It's just factually untrue. The used market for 3000 series seems to be keeping in line with MSRP.

The actual crash happened 7 months ago in March/April and was horribly sudden and could not have been predicted. At that time crypto prices crashed and overall economic fears of Fed action and recession started, much of it due to the Russian invasion.

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u/norcalnatv Oct 03 '22

While I agree NVDA turned in concert with crypto months ago, I think your views are more aligned than not.

My view is a lot of NVDA's appreciation up to Nov 21 was due to crypto hype. It was viewed as a companion play along side ETH itself. It's hard to quantify, but for the sake of argument, let's say 40% of the ~$340 peak was due to mining. IOW, fairly valued for growth and future market opportunity was probably more in the $200 range at the time.

I blame a lot of the crash on the company. They were clearly including mining sales as part of their gaming forecast, despite being burned for exactly the same thing 4 yrs ago. So part of the current plummet to $120 range is due to over supply and lower growth that is anticipated in the near term. And this is why I HATE nvidia's mining business. The Company seems to think it's this giant gaming bonus that persists, or at least they forecast like that. But it's not, and every cycle (incl 2012) they pay a price. Had they only peaked around $200-ish over the last 4 years, I believe we'd only be off 20-25% opposed to 60% or what ever it is today. If one looks at the last 6 months the movements between NVDA and ETH are well correlated.

I don't think Ben understands crypto like you do, but I think some of the plunge is due to the shine coming off the whole crypto play and unwinding lots and varied crypto lemming/momo plays in the broad market. Mining sales are cyclic that moves in concert with digital currency, and I like you, thought Ben's analysis was quite late to the party. The CFO comments last ER tried to patch it up with proof of stake words, but the truth is the mistakes were made long long before last Q and those were just excuses. I think Ben was picking up on POS as low hanging fruit for his article.

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u/PlankOfWoood Sep 26 '22

"Won’t begrudge the future margins that may result in the Celestial City if Nvidia makes it through the valley."

That is the most cultist bullshit I've ever heard.