What happened

After popping briefly yesterday on positive analyst commentary over its 2022 Global Technical Conference performance, Nvidia (NVDA 0.35%) stock is trending lower again Thursday -- down 5% through 11 a.m. on some curious comments from the company's CEO.

Commenting on what some analysts have called the "eye-watering" prices announced for its latest series of GeForce RTX graphics, Nvidia CEO Jensen Huang asserted that "Moore's Law is dead" -- and that semiconductor prices are only going up from here.

So what

To refresh your memory, Moore's Law is an assertion made by legendary Intel engineer Gordon Moore in 1965, that the number of transistors in an integrated circuit roughly doubles every two years, with the result that semiconductors will get both better and cheaper over time.

For six decades, that held true, but Huang argues that the idea of getting twice the capability out of a semiconductor for the same price (or similar capability for half price) every couple of years is now "completely over."  

Now what

Now, Huang made this argument in defense of Nvidia's high prices -- and that makes sense. If Nvidia customers expect that Nvidia's chips will get better, and cheaper, if they're just patient enough to wait, then...they might decide to wait, and not pony up for Nvidia's latest batch of superchips as quickly as Nvidia might like.

Indeed, Nvidia's most recent sales report of a sequential 19% drop in revenues suggests this is already happening. Jensen's probably not happy about this, and so he's arguing that his company's new chips offer a "fantastic value relative to similarly priced RTX 3080 GPUs" already, and that consumers shouldn't wait for their prices to get cheaper -- because they won't.

And this plan might work. Problem is, in making this argument, Jensen has also dropped a hint that Nvidia might be encountering technical difficulties in its operations such that it won't be able to keep up with Moore's Law in the future. If that's the case, then investors may be right to wonder why they're being asked to pay 43 times earnings for Nvidia when chipmaker Intel, for example, can be had for barely six times earnings.

I think that's a fair question to ask.