Is AI over hyped?
Here is how you can empirically know whether AI is over-hyped or not.
Follow the money.
Nvidia’s earnings call is soon.
Nvidia has been the poster-child beneficiary of the AI hype train because they make chips needed to train large language models like ChatGPT.
Many famous investors have said things like “I don’t see a world where Nvidia doesn’t do well”. Everyone is betting on them.
But something funny happens when everyone knows success is a sure thing.
Nvidia’s stock is trading at 28 times its revenue. That means they would need to give you ALL of the money they make for the next 28 years straight and not pay to manufacturer their chips, not pay for research and development, not even pay their 39,000 employees.
The only way this happens is if NVIDA grows exponentially.
If their stock drops after earnings, you’ll know AI isn’t living up to the hype… yet.