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AI takes another hit

I predicted that November would be a rocky month for the AI industry but even I wasn't prepared for some of the latest revelations.

The thing grabbing most of the headlines of late has been NVIDIA CEO Jensen Huang's affair with an alleged Chinese spy. Why is it that so many billionaires have trouble keeping it in their pants?

I guess wealth and power are a potent aphrodisiac and eventually those in this position yield to temptation.

Fortunately I don't think I'll ever have to deal with that issue.

However, Jensen today announced that in the wake of this scandal, and another alleged affair, he is resigning from NVIDIA.

Markets have reacted quickly and negatively with another 10 percent slide in NVIDIA's stock price shortly after the announcement.

This slide simply leaves me even less impressed with the investors who've thrown trillions of dollars into the AI build-out. Of all the things that could affect the market, Jensen's infidelity and resignation is one of the least important IMHO.

Why aren't these investors more worried about the fact that most of these companies are seeing a 10:1 revenue to investment ratio? Surely the fact that revenues aren't coming anywhere near to covering costs should be a more worrying signal.

What's more, of all the companies in the AI industry, NVIDIA is the one best positioned to weather the storm that would follow an AI bubble burst. Its hardware is the "must have" component for almost all AI systems, whether in datacentres or implemented locally. Yes, they may take a bit of a hammering in the short-term but they'll still be one of the only players who'll be banking profits all the way through this fiasco.

Even if we end up with a glut of unused datacentre-type GPUs when the hyperscalers start retrenching or even folding, the rapid pace of innovataion will mean that those surplus GPUs soon lose their value and everyone will once again be turning to NVIDIA for the fastest, most powerfull, most energy-efficient chips from their next generation.

Even better, there really doesn't seem to be any real competition to NVIDIA when it comes to this sort of silicon so it's not as if some new kid on the block will come from out of nowhere and dethrone them.

Even without Mr Leather Jacket himself, NVIDIA will do very well thank you, cashing in on AI, some forms of crypto-mining and even (if worst comes to worst) returning to the market on which they were built, namely gaming GPUs. Whilst we all know that their stock remains overpriced, it will be a good buy once it bottoms out in the wake of the AI bubble-burst.

Where to from here for Mr Huang?

Well as someone who owns 3 percent of NVIDA, I think it's fair to say that Jensen will not be standing inline at a soup kitchen any time soon.

If he's a real idiot (and he's been acting a bit idiotic of late) he might want to take up Elon Musk's offer of a job.

I love it how billionaires have each others' backs when times get tough. However, I'm pretty sure the last thing the world needs is a philandering duo of the likes such a partnership would produce.

Ah well, at least it's a fantastic spectator sport, watching the rich and powerful make fools of themselves and watching investors grieve over the drips on the bar of the Titanic while the iceberg of AI bubble collapse looms large in the porthole.

Is this schadenfreude I am experiencing?

Carpe Diem folks!

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