Peter Theil on why stock of Nvidia, the world’s most-valuable company, may not be a ‘good buy’ now
Nvidia recently reported its second-quarter revenue. The company reported revenue of $46.74 billion, a 56% year-over-year jump, beating Wall Street’s forecast of $46.02 billion. Despite the strong numbers, shares fell 3.14% post-earnings, reflecting investor caution. Billionaire investor and PayPal co-founder Peter Theil praises Nvidia’s chip monopoly but cautions against chasing the hype. Theil acknowledged Nvidia’s dominant position in the hardware layer of AI, but suggests that the stock of the world’s most valuable company may no longer be a good investment. Speaking at the All-in Summit in September 2024, Theil talked about his perception on the ongoing AI race.
Peter Thiel: AI race is no longer about Elon Musk, Sam Altman, or Mark Zuckerberg
As reported by Bezinga, speaking at the All-In Summit in September 2024, PayPal co-founder and venture capitalist Pete Theil refused to crown a winner the in AI arm race between Sam Atlman, Mark Zuckerberg and Elon Musk. Instead of this, Theil turned the spotlight on Nvidia and praised the company for its grip on the hardware layer of AI. He said, “It’s Nvidia, it’s the hardware, the chips layer,” adding that they are “making all the money while everybody else is collectively losing money.”“Whoever I talk to last … I find very convincing in the moment,” Thiel joked, reflecting on his shifting views after conversations with Musk and others. He criticized OpenAI’s former nonprofit structure as “preposterous,” suggesting its chaotic governance may have justified its pivot to a for-profit model.
Nvidia’s rise: A talent gap in semiconductors
Thiel attributed Nvidia’s current monopoly to a generational shift in talent, noting that after 1993, talented people gravitated toward software rather than semiconductors, leaving the field open for companies like Nvidia to dominate.He emphasised that most of the founders flocked to software, Nvidia quietly focused on building monopoly in GPUs which is now the backbone of AI infrastructure. “They’re making all the money while everybody else is collectively losing money,” Thiel noted.
The bubble warning: “Uncomfortably close to 1999”
Despite the promising growth showed by Nvidia, Theil voiced his concern about the AI investment frenzy. Comparing it to the dot-com bubble, he said the current climate feels “uncomfortably close to 1999.”He acknowledged Nvidia’s blockbuster performance but warned that its stock may no longer be a bargain. “Maybe a year ago or two years ago, Nvidia would have been a good buy,” Thiel said. “Now everyone knows they’re making too much money and everyone’s trying to copy them.”
