What is the connection between the discovery of fire by humans and AI stock valuation?

Nvidia’s market cap was $300 Billion in October 2022, and it crossed $3 Trillion (10X) in June 2024, Why? What next?

1. Fire

The use of fire by humans separated us from the other Animals. “Use of Fire” is the earliest form of Natural intelligence.

According to Professor John Gowlett

“At first, early humans were fire foragers, meaning they knew fire could be beneficial. When they encountered it on the landscape, they would watch or follow it.

After encountering a naturally occurring wildfire, these early humans might have revisited the site to see what nature had cooked up for them
rather than as an event, the discovery of fire use may be seen as a set of processes happening over the long term.”

Although Humans were aware of fire at least 2 million years ago, the evidence suggests humans started making fire 800,000 years ago.

It took 1,200 years to tame the fire, i.e. one cannot use it unless one learns to control it.

Creation and Control are two sides of the same coin.

Cooking allowed our ancestors to become much more efficient eaters.

Instead of spending the entire day gnawing on nuts and berries, they could cook animal meat, which provided a much higher caloric intake.

It helped humans to survive by staying warm and making tools and weapons to defend against nature.

2. Generative Artificial Intelligence

Open AI used the Google Transformer framework on Nvidia chips to digest the internet and make human-like connections. ChatGPT was released in 2022. Humans think Generative AI could be a game changer.

It took 1,200 years to harness the power of fire to create, control, and use the fire effectively.

It took 20+ years after the dawn of the internet and dot com crash for Google, Amazon, and Meta to emerge.

It will take at least 10+ years for Generative AI to mature.

During COVID, the Fed injected $8 trillion of cash into the economy. This influx of cash ended up on enterprise balance sheets or in individual savings accounts.

Companies are using cash on their balance sheets to buy NVIDIA chips and individuals are using cash to buy NVIDIA stock, mainly due to the fear of missing out.

The people who invented refrigeration made some money but most of the money was made by Coca-Cola who used refrigeration to build an empire.

We don’t know all the beneficiaries of Gen AI yet.

What next?

It is impossible to predict when commercially viable and scalable generative AI  applications will emerge.

However, the NVIDIA boom will continue as long as there is excess cash in the economy.

Note: Views are personal and certainly not investment advice.

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