Economics: Ten slower and less capable GPUs, each one tenth as effective as a leading-edge GPU, can effectively substitute for one such if the software is there. Betting on Nvidia’s hypervaluation is a bit that all of the following are true:

• software will not be there for at least a decade,

• Over the next decade TSMC will not use its market power as Nvidia’s effective soul supplier to redistribute the surplus in its favor.

• Nvidia will maintain its current GPU design lead for at least a decade/

What are the odds that all of these are true? Low. So what would be the best way to start thinking about how to put on a limited-risk short.

Because, of course, maybe something else is going on. Maybe the real play is that lots of ignorant VCs and meme stock traders will get themselves fleeced by grifters, all of whom think spending a fortune on Nvidia chips are necessary table stakes for keeping the grift going:

Dan McCrum: Nvidia is nuts, when’s the crash?: ‘A chip in every pot: Before the AI fever breaks few will bet against Nvidia’s market value rising further as stock market investors swoon at thoughts of the bot-overlord future. This week Nvidia’s market cap passed the $1.8tn mark, leapfrogging Alphabet—whose 2023 net income was greater than Nvidia’s 2023 revenues—to become the third most valuable US company…. Nvidia options have gone wild—Tesla wild. Nvidia’s chips are essential to the current generation of machine learning models and their associated services, and so will earn the company extraordinary profits for the foreseeable future. That seems to be the general idea at least. Pour cold water over it at your peril…. Allow us instead to merely pass on a few back-of-the-envelope calculations… from the tech-focused curmudgeons over at cityam.com/the-hedgies-……. Nvidia shareholders are making a bet that… competition, innovation, and pricing pressure will not come to bear until at least the mid-2030s… <ft.com/content/0cffec6e…>