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Comment on The Value of NVIDIA Now Exceeds an Unprecedented 16% of U.S. GDP

tal@lemmy.today ⁨4⁩ ⁨months⁩ ago

The United States has tethered 16% of its entire economic output to the fortunes of a single company

That’s not really how that works. Those two numbers aren’t comparable to each other. Nvidia’s market capitalization, what investors are willing to pay for ownership of the country, is equal to sixteen percent of US GDP, the total annual economic activity in the US.

They’re both dollar values, but it’s like comparing the value of my car to my annual income.

You could say that the value of a company is somewhat-linked to the expected value of its future annual profit, which is loosely linked to its future annual revenue, which is at least more connected to GDP, but that’s not going to be anything like a 1:1 ratio, either.

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scarabic@lemmy.world ⁨4⁩ ⁨months⁩ ago
Thank you. I mean what??? The phrasing is idiotic. This company has a large market cap, therefore the US has “tethered its economic output” to it? What’s that even supposed to mean?

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kibiz0r@midwest.social ⁨4⁩ ⁨months⁩ ago
The original source was much more sensible.

The comparison makes sense for evaluating whether you’re over-invested in something. Like, if Nvidia suddenly poofed out of existence, would it seriously be worth 16% of everything the whole country makes in a year to get it back?

Owning a car that’s worth 16% of your yearly income sounds reasonable, no matter what your actual income is. A Pokemon card collection that’s 16% of your income is probably too risky, no matter what your actual income is.

Also, GDP is a decent scale to use for charting investment in a productivity tool, because if GDP ramped up at the same time as investment then it looks less like a bubble, even if they both ramp up quickly.

But that’s not what we see. We see a sudden and volatile shift, nothing like the normal pattern before the hype.

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tburkhol@lemmy.world ⁨4⁩ ⁨months⁩ ago
So, the US GDP is about $30T. Walmart revenue is about $700B, or 2.3% of GDP. Amazon, 2.1%. United Healthcare, 1.3%. Roughly one out of every 20 dollars spent in the US goes to Walmart or Amazon. That’s kind of terrifying.

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TheTechnician27@lemmy.world ⁨4⁩ ⁨months⁩ ago
Get that first week of Macroecon 101 shit out of here before I go into outrage withdrawal.

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- PattyMcB@lemmy.world ⁨4⁩ ⁨months⁩ ago
  RAGE!
  
  lol
  
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BombOmOm@lemmy.world ⁨4⁩ ⁨months⁩ ago

The United States has tethered 16% of its entire economic output to the fortunes of a single company

Yeah, this article should compare nVidia’s revenue to the US GDP (both measure of annual production). But we know why they aren’t, as it wouldn’t produce an alarming stat.

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- Goodlucksil@lemmy.dbzer0.com ⁨4⁩ ⁨months⁩ ago
  Still, 1/200 of the country with the biggest military is a large amount for a single company.
  
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- cygnus@lemmy.ca ⁨4⁩ ⁨months⁩ ago
  
  Yeah, this article should compare nVidia’s revenue to the US GDP (both measure of annual production). But we know why they aren’t, as it wouldn’t produce an alarming stat.
  
  Not really, because Nvidia’s revenue is far less exorbitant than its market cap. I’m not sure why c/technology is suddenly a dumping ground for every random Medium blog, which is as trustworthy a news source as somebody’s Facebook feed.
  
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  - supersquirrel@sopuli.xyz ⁨4⁩ ⁨months⁩ ago
    
    The AI bubble will pop, but will likely be more like the doctom crash than the 2008 one. It isn’t as interconnected with the rest of the economy.
    
    This is going to age like milk.
    
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    cygnus@lemmy.ca ⁨4⁩ ⁨months⁩ ago
    The dotcom crash was no joke. Most people here weren’t around for it (as adults at least) so they brush it off. I’m not saying this next crash won’t be bad, I’m saying it won’t have the knock-on liquidity effects of 2008.
    
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  - Alphane_Moon@lemmy.world ⁨4⁩ ⁨months⁩ ago
    I generally agree with you, except I don’t think we can speculate whether it will be like 2008 the dot-com bubble.
    
    The world economy different from what it was ~25 years ago. I believe the reliance on index type funds has increased at a drastic rate.
    
    There is also things like the relative concentration of AI-influenced stocks.
    
    Another new piece is America becoming much more corrupt. Americans might not care about this, but it would be naive to think this would not have caustic effect in the medium term on the real world.
    
    Mind you, I am not necessarily saying I know the correct answer, just pointing out some things to consider.
    
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    cygnus@lemmy.ca ⁨4⁩ ⁨months⁩ ago
    
    I believe the reliance on index type funds has increased at a drastic rate.
    
    Very good point, although this will disproportionately harm individuals, and the people in charge don’t really care about that so it won’t be as disruptive as somebody important (like a bank or a hedge fund) getting into financial trouble.
    
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  - tal@lemmy.today ⁨4⁩ ⁨months⁩ ago
    
    I’m not sure why c/technology is suddenly a dumping ground for every random Medium blog, which is as trustworthy a news source as somebody’s Facebook feed.
    
    That blog is run by the poster, who is rather on my “users here to push an agenda” list.
    
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FauxLiving@lemmy.world ⁨4⁩ ⁨months⁩ ago

They’re both dollar values, but it’s like comparing the value of my car to my annual income.

The thing that every bank does in order to decide if they should give you more money?

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- FishFace@lemmy.world ⁨4⁩ ⁨months⁩ ago
  And if the us government were lending someone money to buy Nvidia, that may be relevant.
  
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