Reading this thread makes me realize that seemingly no one has heard the basic, mundane case for why Nvidia would want to do so much "circular financing" as a matter of totally normal business strategy. This may not be the whole story, but it's worth understanding.
Because of bottlenecks in the supply chain, Nvidia knows it is going to sell 100% of its inventory. They could raise prices quite a bit more, but then their only customers would be hyperscalers (building competing chips) and possibly OpenAI and Anthropic. Nvidia is willing to forgo present day profits for the strategic value of keeping its customer base diverse and promoting the network effects of e.g. CUDA. Instead of quoting a lower price per GPU to neoclouds and startups, they finance purchases of chips, but the two are roughly equivalent (financing means Nvidia takes on more risk, but has more upside and locks in future demand). It is in their commercial interest to have many competing buyers of their chips.
Obviously this creates fun mechanisms for fraud and wacky accounting (and I'm agnostic as to whether that's happening here), but it's worth knowing about the boring/obvious story before donning your tinfoil hat.
>In Berlin during a conference, Huang, accompanied by his top sales executives, broadcast a new message to a half-dozen CEOs of companies that are major buyers of Nvidia chips who were seated around a circular table. He opened with a story that sounded like a fable, according to people who attended.
Huang had once found a soup vendor in Japan, he said, with a long line of customers. He joined the line, and after a long wait, enjoyed one of the best bowls of soup he’d ever had. When he asked for another serving, the soup-seller told him no—he had too many customers waiting and not enough soup for all of them.
“He’s a better businessperson than all of you,” Huang told the cloud computing CEOs. The soup-man doesn’t sell out all his inventory to one or two customers, but instead keeps prices high and his customer base diverse, the CEO said.
“You are not establishing the value of my products,” he said.
When you go into a Ford dealership there is a good chance that you will buy your truck with a loan from Ford credit. That probably helps keep the price of Ford trucks high and Ford makes a lot from loans. And there are problems today with vehicles being repossessed too much because of the long loan terms.
‘Circular financing’ sounds sinister but customer financing and vertical investments aren’t strange or uncommon. It could be bad for sure. But it is not like they invented a new form of wickedness.
Ford is lending money to people with jobs and credit history--startups don't have the business equivalent of either. One can also argue that while the collateral (cars) does depreciate, they'd don't depreciate as quickly as GPUs.
Its not that circular financing is sinister or illegal, its that its very risky. If the startups that are purchasing the product are also getting a loan from the company making the product and that loan is also backed by that same company then if that startup is unprofitable and has massive debt at interest rates like 15% or has near junk bond ratings then the company that built, financed and backed the products is on the hook for it all.
Sure they have customers pounding at their door for more product. At some point the hype machine stops and new neocloud startups can't get funding because its too expensive or banks don't trust them. Then what happens? The circular financing starts to unwind itself and NVidia is the "bag holder". If you look up Lucent or Nortel this happened to them during the dot com boom. There is a positive difference here with NVidia, they have so much demand and usage this can probably go on for a while. Lucent and Nortel were bit by dark fiber and the usage/demand just wasn't there.
If Jensen at the helm of NVidia is bullying/convincing companies into purchasing more than they need, financing it, etc. and creating the hype machine himself and NewCEO ain't going to play that game, then it could be an end to the circular financing.
"dealer financing" is an umbrella term for the dealer's finance office acting as a "loan broker" and shopping around the customer's credit profile to find any bank willing to lend the money. (When the customer fills out the credit application at the dealership, the dealer then submits the info simultaneously to a list of potential banks.) The eventual underwriter for the loan may be the auto manufacturer's finance arm (e.g. General Motors Financial subsidiary or Toyota Motor Credit, etc) ... or ... it may be a non-automaker bank such as Chase or Capital One. Whichever one the customer ends up with depends on the particular credit score.
None of those financial entities are making car loans as a "loss leader". It's the reverse situation where both the dealer and the underwriting bank make money and the interest rates are high enough such that the banks pay kickback commissions to the dealer for funneling the loan to them.
> I've never used dealer financing that wasn't below 2% APR
Interest rates (such as "0% APR") that are artificially lower than prevailing market rates means the missing extra interest is embedded in the sales amount in the form of a higher price. TNSTAAFL.
Working with a (comparatively small fry) customer who has a $5M grant to buy HGX B300s, current lead time is 37 weeks. This is for a chip which has already been superseded by the R100. NVIDIA has customers lined up around the block, including smaller shops that don't get special treatment.
I don't deal with their big customers, but the idea that NVIDIA doesn't have customers ready to spend $$$$ to get some GPU in their datacenter is proveably false. It's likely easier for them to handle big transactions for big customers, but there's also a loooong tail of customers in line for a smaller piece of the pie.
LLM models are proving math theorems no humans could in ways no humans could. These GPUs can literally run that intelligence level and as humans we have an endless set of problems we need to work on.
Many people are deploying and using this new technology for very productive ways. That’s why Anthropic revenue is so impressive.
There is a very large cohort of reasonably well educated and articulate humans who are having problems processing this situation in some deep way that has them in denial and constantly insisting there is a massive bubble or something fraudulent or broken, of course there probably will be to a certain extent, some overshooting. and they will claim “see we were right” but even if that happens there is incredible rapid progress that is real, tangible, backed by real money and spending, and real productivity.
Anyway, going back to my desk now and steering LLMs on a code base created in 36 hours that is equivalent to 10-20 man years of work just 4 years ago, but sure “it’s all a bubble”, and like you said tell that to everyone in-line around the block who knows what’s really happening and wants more of this hardware which can do this.
I am concerned about the long term impacts on the economy when more and more people lose their jobs from Ai and automation. What happens when the middle class disappears completely and no one has money to buy anything? Who are all these companies spending all this money on Ai compute going to sell to? Demand dries up, then demand for Ai dries up, and then pop.
Also, how do we know at what point we'll have too many gpus online from all of these datacenter build outs? They are just assuming demand will continue to grow but what happens when supply becomes higher demand?
And at what point is a model good enough for most work? If someone releases an opus 5.5 level model as open source, does the whole equation flip and does everyone go to just running a local model?
They lose their ok paying jobs and are forced into minimum wage jobs because Ai automated away their job. There is already massive inflation and regular people are struggling. This is why some people spout on about minimum basic income but the reality is that our politicians are too captured by business and special interests to implement the needed taxation to implement a program like that.
Interesting that
the main thing you can say about your codebase is that it took exactly 36 hours. Not a few days, like most people would say (because they would be focused on the product and not the exact hours). And nothing about what is does or whether there is even one customer that is using it.
Recently, I encountered a vendor with a near monopoly. I learned that they’re priced reasonably for new market entrants out of fear of monopsony.
monopsony - a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers
Could we also include national security? The people of the US really want to avoid losing to our competition because they are forced to develop their own cutting edge chips. We need the world on our petrodollar and the world’s best AI researchers on our chips. Jackson Polloc is famous largely because the American government created false demand by driving his auction prices up for national security reasons. Lutnick has even been honest, about that. In this case, NVDA and US have aligned interests in NVDA’s dominance, and it seems like being given more leeway to engage in creative if not entirely kosher business practices might be part of a coordinated plan with the current administration.
> the strategic value of keeping its customer base diverse
That's one way to say, "maintain a monopoly where everyone needs you and you depend on no one."
Well funded hyperscalers are trying to reduce dependence on Nvidia. And Nvidia is conversely trying to push into cloud with these credit backstop/revenue sharing deals.
It does make them even more leveraged to the bubble though. If a neo cloud collapses, they're lose customers and gain debt collectors. It's a sound business strategy until it isn't. It's not good risk management, but then you don't become the world's largest company by making safe bets.
Nvidia isn’t taking on any material debt to finance all these deals. They have the cash on hand to cover pretty much a complete collapse of every neocloud they’re currently backstopping.
So yeah if it goes tits up, they loose customers, but they’re customers that wouldn’t exist otherwise, and they can easily pay to make the debt collectors go away. But if it’s anything except a complete collapse, then they’ve grown the customer base for their products long term, and hedged against hyper scalers replacing them with custom silicon.
At the moment it looks like the downside risk is limited, and in the worse case, tolerable, whereas the upside is unbounded. Those are really good bets to be placing, the only trade-off is opportunity cost. But even there, what other opportunities could Nvidia be deploying their cash into, beyond share buybacks?
Also, it's basically putting your profit into an investment (the loan that will have to be paid back) while keeping the inventory going and prices rising
It's obviously impossible to tell without more insight, but the large AI labs are very much out compute and could use more of it, or they wouldn't be renting DCs from their competitors.
The neoclouds ensure there will be consistent demand of Nvidia GPUs even after everyone big moves to their own custom ASICs
Out of compute or out of chips? I swear I heard somebody saying Amazon had a whole datacenter worth of GPUs not even pluugged in sitting in storage because they were pressured into to purchasing them early by Nvidia and datacenter contruction was significantly delayed.
But that also just shows that the demand for nVidia’s products exceeds supply. The reason that nVidia was able to pressure people with take-it-or-leave-it deals (if that’s what did happen) is precisely because everyone involved expected (and correctly, so far, as it turns out) that there would be plenty of other customers ready to take all the places in the queue.
Running out of compute isn’t the same as “can buy more GPUs and use them”, else AWS and MSFT wouldn’t have billions of dollars of GPUs in warehouses that they have no datacenters in which to rack them.
GPU supply isn’t the constraint; datacenter space is. And that means Nvidia might not normally be able to sell all that they’d like even with seeming high demand.
I mean, the wind can start blowing the other direction. And they can go overboard on the deals. But in the past few years, yes Nvidia has predictably sold out.
You should call this belief "Effective Altruism: Founders Edition"
What you're describing is the belief that they'll always sell their GPUs for a profit, so it doesn't matter what rules of accounting they violate _today_ because they'll be effectively more valuable _tomorrow_.
The same way an effective Altruist will poison a town's water supply if it grants them billions of dollars in the future and allows them to buy the town bottled water at some interdeterminate point in the future.
It boils down to the belief over reality, and feelings over facts; essentially, you're saying "as long as their intentions were good (gpus for everyone), it doesn't matter how much they hurt everyone"
No one is saying they broke a rule of accounting. Or, I haven’t seen anyone say how they violated GAAP rules. I think EA is dumb to but I don’t think that is the issue here.
This is third source reporting. WSJ does the original, Wccftech reports that WSJ reports, now Techpowerup reports what Wccftech reports about WSJ reporting.
ORGINAL is the best. It tells completely different story better (not a weird twist where CEO trying to increase sales and price of their product is suspect)
>Huang had launched a dealmaking spree and was now starting to question whether it had gone too far, according to people familiar with the matter.
(neopotism, Huang’s son-in-law, Nico Caprez)
>Huang’s son-in-law Caprez and another vice president Raj Mirpuri told prospective business partners that Nvidia could arrange credit-support deals within a couple of weeks. Dozens of companies lined up for this program, hoping Nvidia’s backing would lower their borrowing costs. In exchange for providing credit support, Nvidia proposed that cloud providers share a cut of their revenue.
>Behind the scenes, she [Kress] tried to rein in Huang’s son-in-law, who had been promoted to a vice president in January, people who worked with her said.
(...)
>By October, Nvidia started to turn off the tap.
> [Story about Japanese Soup vendor] The soup-man doesn’t sell out all his inventory to one or two customers, but instead keeps prices high and his customer base diverse, the CEO said.
People have been mentioning about how all of ai is a circular financing scheme for months. Anthropic, openai, meta, etc. they all have been meeting with one another and making really insane deals. I am curious what the details are specifically, but I am shocked to find that anyone let this go on this long and only now decided to act.
It would be historically entertaining if all the ai hype crowd found out they have been hyping a ccp scheme to crash the us economy to the point where even the military was cheering it on. But the truth is, this is just how business works now that billionaires and trillionaires can do what they want.
I want what's best for the US but acting this slowly puts any meaningful repercussions for this behavior into the realm of theatrics rather then lessons learned. Oh well I guess some people got really wealthy so we should all be cheering while the price of food and everything else is insane.
Why CCP? That Nvidia has been irking Wall Street bankers by acting like a bank has been public knowledge for quite a while. What Nvidia did is instead of selling their GPUs for $10, they sold them for $100, with very favorable terms over a long time, creating lots of (cheap) debt for others, who were mainly datacenter companies, who could then pay off the loans and rent out the GPUs at razor thin margins.
This scheme had pissed off bankers that a company muscled in on their turf, created lots of debt in a time when US debt was already sky high and becoming unpopular, relied on GPU depreciation being low (implying tech progress was slow, which didn't gel with the singularity crowd), and getting crazy rich in the process.
I don't even know how China factors into this other than competing with the US
> This scheme had pissed off bankers that a company muscled in on their turf
Weird if true, because businesses having a side-line in financing their customers is extremely common. Most large retailers, car dealers etc all do it. Sometimes they outsource to a third party, but sometimes they do it all in house. In a few cases they end up making more money as a finance company than the business they started in.
Yeah, but at this scale, it's mostly banks and private equity and other finance companies, right? Like, taking on enormous data center type debt? And especially on the bank side, we are highly regulated. These sorts of deals between the AI companies are red flags to us.
I've seen it be done with consumers and small B2B but not big giant business finance like this before. I could see how it could irk banks. I mostly work as a programmer in finance and I will say the mood has not been nearly as...idk...jubilant about the whole AI situation as it seems to be amongst friends in the startup scene.
It's mostly not helped our productivity and projects to implement (except for the very small local models that can run on mainframes and the like) have mostly failed, so I could see how bankers and others working in finance might be MORE willing to believ that there was a bunch of conspiratorial stuff going on than the average Hacker News patron who can get away with letting it rip with Claude on the job.
I won't disclose what company I'm at, but it seems the general opinion amongst big bankers and programmers for big banks is that we are in a bubble and that we don't intend to be the ones that get in trouble for it this time and have stayed pretty clean.
Who decided to act? Some dirt that everyone thought was swept under the rug leaked, and now everyone can see how much of a dirt bag Jensen is. It's looking to me like the house that Jensen built is just a bit less raggedy than a house of cards built on sand on top of an active fault line. The news of these deals isn't a recent revelation. The recent news is that there's possible skirting of laws by the company led by a philanderer at best with one of his trysts being with a foreign spy. There is no good light to paint this.
So are most of the shareholders: most of this crap is off of the balance sheet until (if) it comes online!
In the first nine months of 2026, Microsoft, Amazon, Alphabet, Meta, and Oracle spent $556.9 billion on capital expenditures against $542.9 billion in operating cash flow, leaving their combined quarterly at -$33 billion.
Off-balance-sheet AI obligations across MSFT, AMZN, GOOGL, META, and ORCL are roughly $3.2 trillion (nearly six times capex).
Oracle is doing cute stuff like locking itself into 15 to 19 year facility leases while only signing customer contracts lasting up to five years. Some sites, they can’t even finish building.
Major cloud providers were running away from Nvidia, making plans to use alternative chips and lessen their reliance on the firm. Even worse, Huang said, the vast supply of chip wafers and memory Nvidia had committed to buying were coming at him like an “avalanche.”
https://archive.is/20261113091227/https://www.wsj.com/tech/j...
Honestly, terrible reporting all around this issue, especially by NYT and WSJ. Then all the other news sources repeated the same lies.
- Singapore govt issued a statement clarifying that WSJ fabricated facts. [1]
- It's been clarified now by the President's Council of Advisors on Science and Technology that there is no convincing evidence that Alice Huang is a spy. [2]
- The statement that Jensen called the new interim CEO ‘a deer in the headlights’ actually hurts NVDA stock, as it lowers the confidence of investors in her and I'm sure WSJ knew that before posting this speculative article with no cited source.
This looks like a hit job on Jensen and Nvidia. NYT and WSJ have spewed false facts with no credible sources (just "anonymous" sources) to discredit Jensen as much as possible and hurt NVDA stock. Jensen probably cheated on his wife, but mere cheating is not grounds to remove a very competent leader from the company he created.
> It's been clarified now by the President's Council of Advisors on Science and Technology that there is no convincing evidence that Alice Huang is a spy. [2]
Anyone appointed by the current Trump administration can't be considered a reliable source. Neither can anyone else with a vested interest in the GPU/AI/datacenter market.
Maybe the spy accusations are bullshit but nobody should take Trump's cronies' word for it.
Good reminder. It wouldn't surprise me if she was or wasn't. They decided now was the time to torch jensen, shortly after POTUS met with xi xingping. They knew he was seeing Alice for months.
The moves jensen made by selling gpus to China illegally in a sense kept thaiwan safer from invasion. Now all this China spy news is going down and in the same week China says it's taking thaiwan again. China does always say that, but maybe this is their way of saying "we aren't getting what we want anymore". Lots of stolen GPU shipments in the last month too. Hard to say.
Sacks cites other officials, including a Democrat who says that he has not seen any convincing evidence.
Jensen is an advocate for open source models and wants the whole humanity to benefit from AI, not just the US. Maybe that's what took him down. Anyway, it's clearly a coordinated hit job.
I am beginning to think the hamhanded manner of this takedown is itself signal to politically vulnerable players. When the public sphere of society has become so vulgar and crass (starting from the top potus) we can only wonder at the level of vitriol and jungle means that happens behind the scenes in semi private.
Jensen Huang is being crucified merely by newspaper articles and innuendos. And the level of social misbahavior by this poor schmuck who happned to land in the society circle of world class SHARKS is so pathetic compared with Epstein norms of these same elite (media, academia, industry, financy, tech, government, all Epstein friends) that it is stupid of us in general public to go along with this.
What a good excuse to believe some publications with no sources cited versus actual officials (US officials and Singaporean officials). A clown costume would be fitting.
Anyway, the Dems have the exact same position as the Republicans, that there is no convincing evidence: "Rep. Jim Himes (D-Conn.), the likely incoming chair of the House Intelligence Committee, is unsure whether a business executive who cultivated close ties with Nvidia chief executive Jensen Huang is a Chinese spy, based on information he received from U.S. intelligence officials in a classified briefing earlier this week." [1]
The accusations made by WSJ, NYT and Economist have proven baseless so far, hence my point that this is a hit job.
I don't believe anything concrete, as far as I'm concerned they're serious but unproven allegations.
> Anyway, the Dems have the exact same position as the Republicans
No, he said that he's unsure at this point, given the evidence available.
And for what it's worth, I wouldn't believe the dems much more than I believe the republicans. Both sides have deep ties to the industry and there's far too much money at stake.
It is also so lucrative to participate in a bubble that if you focus too much on the problems you will miss out.
I think part of a bubble is knowing the problems but participating anyway. Over time then the problems start to feel normal and while things are good you rationalize why maybe the problems aren't such a big deal after all.
When a bubble pops, the pop typically takes years to happen. It's more of a slow deflation in most cases. Afterwards, you can easily spot the peak that would never be reached again but, during a "pop", it's not clear if you're past that peak or if you're just experiencing a momentary blip on the path to new highs.
Nvidia is likely not going to surge back to $240 soon. It might go lower actually. Skeletons are still falling out of closets. Huang may have been the tech founder's tech founder, but he kept some pretty nasty company in recent years and, as we're now finding out, got both himself and his company into shady territory. As it turns out, ethics are not just for aesthetics.
Is Nvidia slowing down for a year or two bad for AI as a technology? Probably not. Nvidia could find a leader that will return them to top form, or another company could take advantage of the situation to catch up and surge past. A lot of AI researchers have been calling for a pause or, at the very least, a slow-down. This might be just what was needed.
However, given Nvidia's utterly unique position as both hardware supplier and bank for the data centre build-out, what will the impact be on the rest of the AI sector? The market is going to have to price in a weaker and slower build-out as well as a loss of trust in Nvidia. That's clear downwards pressure. Is it a blip, or are we now past the peak?
It’s not the only indication that we are past the peak, I think. OpenAI’s failure to raise what they wanted, Anthropic’s likely junk rating, banks struggling to offload AI debt at fairly deep discounts, Oracle’s obvious problems, the strength of open weights and open source, a loss of confidence in Coreweave etc.
As you say, if Nvidia is chastened enough to slow its banking endeavours and that lets air out of the bubble in a progressive rather than dramatic way, that’s probably better for everyone (except OpenAI, who are probably hosed in that scenario, as they have huge commitments but are struggling to raise what they need; Anthropic might last long enough to reassess)
I'll admit it, I am not very well educated in the ways of finance but I am a bit baffled how Anthropic can be valued at (reportedly) upwards of 1 trillion but also have a "junk" rating?
Junk rating from a relatively high likelihood that they can’t pay the people they owe money to. If you buy their shares they are much more likely to go to zero than a more stable company in the near term. So you don’t want to buy anything Anthropic with money that you may need for anything.
High valuation because the public believe that if they do figure it out they could be worth hundreds of trillions. So a lot of people may want to buy it as a speculative bet of ungodly returns
Previous bubble villain Michael Milken and the 80s leveraged buyout bubble made it a name of common parlance because that bubble was built on "junk" bonds.
The old traders of that time who were against what Milken was doing called them "junk" and the name has stuck ever since.
It just means "risky". If you trade bonds it has no association with "bad". It is an inside bond market term, I think that is why it sticks too. It is a fun term if you trade bonds but terrible for communicating to the average person.
No, junk means something specific here, it's not just a vague term.
If you think it's terrible for communicating to the average person (and I am very much the average person) you could explain it yourself in detail.
So I will try, and I will accept constructive criticism:
You are right to imply that it is a sort of consensus rating threshold maintained by the ratings agencies that means their (Anthropic's) debts are not considered investment-grade — that they are speculative, high risk, that they are considered likely not to be able to repay. It is ultimately the ratings' companies (and therefore some individual people's) decisions as to whether they are above or below this threshold.
But for Anthropic it has concrete impacts, doesn't it? It means they will pay much more for their debt, they may not be able to negotiate long repayment terms, they may need to pay higher underwriters fees, they may be limited by the terms of any individual loan (how much future debt they are allowed to take on, whether they need that lender's approval to restructure their business in even small ways), and most importantly, some institutional investors (pension funds, mutuals, insurance companies, ETFs etc.) will be barred from investing (which drives why their debt will cost more).
Frankly I think it is baffling that Anthropic are still headed to an IPO when this is what it could look like on the other side.
'junk rating' always means bonds, and it's the share price/market cap that's that high.
Very loosely a 'high' (price over earnings) share price is about growth and exciting prospects; high or well rated bond is about stability. (Not to suggest they move linearly in opposite directions though!)
A lot of people want to buy their stock because of their fame, but the company’s underlying financials are junk (way too many commitments, way too little revenue)
The problem is they don’t have a unique enough product to sell at so high margin. If they were the only AI good enough to use, then I’d be ok. But given that cheap Deepseek is always catching up their stock is useless
They are different things, the valuation applies to their equity value (reported) but the junk rating is for its debt and how creditors asses the quality of the debt. If a company is burning tens of billions of dollars and is only "operationally" profitable, you would kind of have some doubts about their ability to repay. Those doubts can stand at odds with how the equity market sees the long-term potential of the company.
Bond ratings are (supposed to be; see 2008 for failure case) based on actual, hard financial metrics. Stock valuations are that, plus fortune telling, plus feels, plus Jim Cramer hitting a big red button.
Would it not be extremely foolhardy for a new CEO to start slow rolling things considering the dominant position Nvidia currently finds itself in? Why would they do that? You say yourself it would clearly be a managed decline in that case. Why would an incoming CEO want that? Don't forget their pay would likely be performance related and probably not tied to decreasing the stock price
I’m pretty naive about this kind of thing, so bear with me, but if your stock is in free fall and you need a new CEO, isn’t there merit in a stabilizing force? No one is ever compensated just for, at least in the near term, stopping the bleeding?
Well the stock is high because shareholders have been predicting massive future growth. If a CEO is going to stabilize the price, that means they have to give investors confidence in the same or at at least similar growth trajectory. Which was aggressive.
Imagine you're about to get on a rocket ship, betting that this famous maverick rocket pilot can take you to Mars in 2 days. He already made it to the moon in 12 hours, record time. And he invented the ship, too. Then the pilot gets caught having an affair with the stewardess, gets fired before the trip, and they bring in a normal airline pilot who's never been on this ship before, never even flown a rocket ship, and who starts talking about good old fashioned normal speeds, and making it to Mars in a few years' time or so. Or, you know what, maybe just orbiting the Earth a few times instead.
You might be tempted to pass on the trip, no? And you wouldn't be the only one. Suddenly this rocket trip which had lots of passengers is completely empty, with no one to fund the trip. This so-called stabilizing force has killed the trip.
Nice analogy but there’s just one problem: it assumes arriving at mars is the end goal. But that’s not how companies seem to operate. They’re about indefinite growth. Which clearly isn’t possible and ends up killing a lot of companies as they eat themselves from the inside just to keep greedy shareholders happy.
There used to be a time when people would invest over the course of decades and enjoy the dividends they received. But these days it’s all just about the short term rewards.
Tragedy of the stock market: infinity can hit a company even if both management and shareholders are fully committed to modest long term stability (apparently this is absolutely not what happened at nvidia).
A company can get into the sights of "infinity believers" even if they try not to. Infinityists will honestly believe that the stock is a very good buy and whenever a "stability lover" has to sell, they will outbid the next stabilityist. Price goes up, it becomes more visible to infinityists and so on. Eventually infinityist will outnumber stabilityist and management will enter "or die trying" mode on promises they never made. Or be replaced.
If they discover tricky shenanigans, they might well announce them publicly to cover their own personal position. At the start, they're not going to have too much invested.
Yes, you publicly announce everything now so you can throw it all at the feet of the ousted leader. If not, enough time will pass where blaming the ousted leader looks like excuses for the current one and just looks bad to the public. Look at the current US administration as an example of how the constant blaming of the previous administration played to the public opinion.
Right. One of the weird side effects of the Jensen Huang report hierarchy is that instead of a handful of direct reports that have stories they need to CYA on, there are over sixty of them! This could make the congressional testimony aspect pretty intense.
That’s a good point. A new CEO never wants a slow unwinding, they go for quick pain to set the baseline of their bonus assessment into something workable.
> When a bubble pops, the pop typically takes years to happen. It's more of a slow deflation in most cases.
That’s just a bear market. Bubbles pop, otherwise we wouldn’t call them bubbles. If you call every downturn a bubble it ceases to be meaningful, and we’d have to come up with a better term for actual bubbles.
Sure you can, if you are your own one-man business. Otherwise it's exploitation—you're stealing from your workers. This is not remotely controversial. (or profit sharing etc, which is so rare as to mostly not exist)
But public perception has huge repercussions in business. If screwing Chinese models contributes to bad public perception, business will realign and oust CEOs who do.
How do you figure? There are certainly places where we manage to create value, but this has little to do with capitalism and more to do with hauling shit out of the earth that we didn't have before.
Even if you know the timing of the collapse of a cataclysmic bubble what do you do?
All of the investable assets will collapse at the same time. Inflation will evaporate cash. Bonds will worth nothing (if the us gov bothers to repay them).
You need to know with ridiculous precision, though. And the triggering event for the collapse usually isn’t predictable. For instance, if we’re seeing the beginning of the end now, we’ll, no-one could have really predicted the current sequence of events, unless they knew about Huang’s misconduct _and_ when it would be leaked.
There's plenty. Electricity (and energy) is absurdly cheap in the modern world. 1GJ is roughly 10$. An H100 running 24/7 takes 20GJ/year, so that's 200$, which is orders of magnitude less than its retail price.
If energy wasn't cheap, you wouldn't see people driving large vanity SUVs around in the least economic way possible.
Right? This fever dream that there are boxes upon boxes of unused cards (some even claiming on this thread that it is 50% of GPUs sold) is utterly delusional. Some people want AI to go away so badly that they temporarily lose the ability to reason.
You're giving them a lot of leniency with that phrasing. Personally I get the impression many never do think in the first place, just imitate it by regurgitating what they've heard from others.
I try and give a lot of leniency because generally these people aren't stupid or meaning to be unpleasant, they are just scared. Which means sympathy, kindness and understanding is the likely cure. You can't reason someone out of a position they didn't reason themselves into.
With the recent craziness, perhaps not all of it is as far from the truth as we might think? There could be quite a gap between units "sold" and units actually made...
There's plenty of electricity to run every GPU in the world, just maybe not enough electricity to run every GPU in the world and have poor people afford AC.
GPU scarcity is a really poor proxy for the health of the AI market. I don’t know if I should be surprised that someone so bullish about it doesn’t understand this.
Did you read the OP? Because Nvidia gave money to people who aren't you, so those people could give the money back to Nvidia for GPUs. In other words they gave away all of their GPUs in exchange for stakes in startups, because they were betting that VC hype and the perception of high demand generated from doing so would be worth more than selling GPUs normally.
I wonder if the economics of the two industries is similar enough to be useful here. Car demand itself seems fairly stable and repossession is a way of recovering value in cases of default. Credit scores of individuals purchasing cars being tied to salary/wages vs. startups without much history. I just wonder if the analogy isn't fraught with issues.
But presumably those gpus are being actually used by those companies? Even if their prices are artificially inflated? Or are these buyers sitting on piles of unused gpus to make demand look good?
A different question might be, will these companies grow over the new few years?
If I give you 10 Million GPU in exchange for 25% of the company and the company goes bust or has negative growth (and thus is forced to sell assets), effectively I just put 10M GPUs on the market with a huge discount.
At a grand enough scale, this undermines the GPU marker and one could argue that Nvidia has been doing this on a massive scale.
> Or are these buyers sitting on piles of unused gpus?
Yes, they are literally doing exactly that. Noting that they aren't truly "buyers" so much as "gift recipients" (in exchange for ownership stake, but the value of their remaining ownership also goes up if these gifts generate sufficient hype for investors to invest more). GPU production is outstripping datacenter capacity.
> But presumably those gpus are being actually used by those companies?
But, even if they were all being used, this wouldn't mean much. The central point is: suppose Nvidia has produced 10 million[1] datacenter-class GPUs during the LLM bubble. Nobody can afford to, or is willing to, buy 10 million datacenter-class GPUs at their list price because the economics don't work out. But if they gift 10 million GPUs for stock, and frame it like they sold the GPUs (a framing that is effective -- although this has been an open secret, this is being reported like news by the WSJ, and to the majority of their readers, it is news), it makes Nvidia GPUs appear to be extremely desirable. Even though, logically, an item that you have to give away because it's not economically worth its market price is the exact opposite. The fact that you can use goods that you've effectively been given for free does not increase the actual economic value of those goods.
It's pertinent to note this scheme works only as long as the hype lasts. If Nvidia gives away millions of GPUs in exchange for stake in LLM startups, and the LLM startups go bust, Nvidia is then billions of dollars in the hole.
[1] (hypothetical number, it's vaguely around this order of magnitude)
Why would they sit on piles of unused GPUs when they could rent them out or use them? Even if they were free that is still not what a business would do with them.
"Why don't they just use their unused GPUs"? - because they literally cannot. GPUs require electricity. They have more GPUs than they can supply electricity to.
> Do you truly believe that the cost that can be charged for inference is below the cost of electricity?
That isn't the issue - it's that building brand new datacentres + the power generation to run them takes a massive amount of time/permitting/money, and by the time those datacentres actually come online, you can be sure that the price pressure on inference will be sharply negative.
It’s not the digital world where you just duplicate an object in memory. You need to find the power somewhere (new contract, generator installation), route it, add management tools (and maybe technicians), and then plug the new gpus. It’s all physical work, which also does cost money, take time, and maybe constrained.
No. I know for a fact that the take you've stated is incorrect, because I work for a startup that makes 8-digit profit annually on inference, with zero outside investment. I don't know why you've latched on to my comment to put this take into my mouth, because I never said anything resembling it. It can be true that a technology has some use while also being true that there is a bubble around people believing things about the technology that aren't true. The internet was one such example: the dotcom bust did not indicate that internet services were not financially viable, but that there were highly irrational allocations of investment that resulted in a lot of people losing a lot of money when the music stopped.
There is a fundamental difference from being able to profit on running some number of GPUs, and being able to profit from running 1 million GPUs. We do not have a business case for 1 million GPUs. Our startup's premise is that there are economically viable niches to use LLMs as tools, which is in stark contrast to OpenAI and Anthropic who are at least publicly selling the idea that LLMs are a form of genuine intelligence that will replace all human labor if you just give them another $10 billion dollars, and then another $10 billion dollars, and then another $10 billion dollars, .....
You may not have a business case for 1 million GPUs but you are not the only business. You clearly have a decent business case for some level of inference as do many others.
The gap between how many GPUs people have a profitable business case for and how many are actually out there is, however, a problem. Per their revealed financials for the pending IPO, Anthropic is deeply, deeply in the hole relative to their spending commitments, which are nearing $1 trillion over the next 5 years. OpenAI's do not appear to be much better from the more limited information we have about them.
The bubble popping will actually make business cases for GPUs much more common to come by, when businesses can acquire them for closer to their cost of production rather than at the insane markups Nvidia currently lists them for. But that won't do Nvidia much good, because Nvidia's valuation is predicated on being able to "sell" as many GPUs as they can produce at a 10x markup over the cost of production - even if much of what is being "sold" is really being given away for equity in businesses that are not financially viable.
The rest of that paragraph continued on to mention two of the biggest users not actually having a profitable business case for the amount of GPUs they have.
That is a huge logical leap you are making then and it isn't supported by the evidence you gave. Are you suggesting that that two companies having more GPUs than they can use is proof GPUs aren't useful at their current price point? The simple fact is many companies would bite your arm off for these cards. Are they wrong to do so?
There is a limit to how many GPUs can be profitable at this price point. Suppose you're running a SaaS. You might be able to charge $20/mo and get a sufficient number of customers to cover costs of X amount of GPUs. This does not mean the market can support X * 100 GPUs profitably. There is a limit to what the market can bear. There are not infinite customers, in any niche, who will pay $20/mo for an LLM-based SaaS. At some point you will saturate your market of potential customers and purchasing more GPUs will not benefit you. And this even applies cross-SaaS. There is a finite pool of any amount of customers who will pay $20/mo for LLM services. If someone is subscribing to a competitor, they are less likely to pay $20/mo to you as well. All of this to say, it is certainly possible to oversupply GPUs that have a 10x markup. If the price is closer to production cost, then maybe they're cheap enough that you can offer a $10/mo plan profitably, and reach a much wider pool of customers and benefit from more GPUs. But there is a finite number of GPUs at which point the market for a sustainable business cases is satiated.
(Consumer sub prices were used for illustrative purposes but this obviously applies to token and enterprise spending as well. Although they're being a little loose due to FOMO, enterprises will not sign blank checks forever if the promised "replace all human labor" does not materialise)
Also, it goes without saying that a GPU that can not even be powered on for lack of power capacity is not being used profitably, at any price point. It could not be more apparent there is an oversupply relative to its current market price, which is a direct result of Nvidia giving away boatloads of GPUs for stakes in unprofitable companies.
OpenAI is in much worse shape because at least Anthropic has the growth to try to justify the spend. I can't see how the economics work but it is at least in some kind of margin of error.
OpenAI just seems like a black hole for money.
I think what you are describing is the sociological/ecological function of a bubble. We pull an unreasonable amount of demand forward, someone else pays for it and when the bubble implodes the good companies that survive the stress test get a free lunch.
Best of luck at the start up. That all sounds right to me. Real intelligence is specialized and ecological. The grand irony to me is that I would love to be an organism that can walk the way I do but also be able to fly like a bird and swim like a shark.
The problem is that organism would be massively too expensive to survive.
I mean even Satya Nadella famously said that Microsoft has plenty of GPUs just nowhere to put them. There are definitely plenty of unused GPUs out there. Jensen is also a big fan of scarcity (said in multiple interviews) so obviously he’d want to keep it up at all costs.
Does the math check out, though? For reference, Nvidia added $17B of non-marketable securities in 2025, and its total revenue was $215B. So, assuming all these equity investments went to GPU purchases, they only amount to 8% of its annual revenue.
Since these firms (neoclouds and AI startups) will get consolidated if Nvidia puts too much money into them, I assume the majority of their funds are coming from elsewhere.
> Corporate development-led AI equity investments alone exceeded $40 billion in just the first four months of 2026
The accusation in the headline is that this activity contributed to the general shortage of GPUs which would, if true, increase their pricing power and profit margins even on chips sold to other customers. So I don't think it's a direct comparison to their equity deals.
Is this the only reason Nvidia made money? No, obviously. But is it adding fuel to the fire? If there is a bubble will this make the fallout worse? Seems likely.
More importantly this suggests a second plausible reason the board might have wanted to wrest control of the company away from him. (The other hypothetical one being that he was doing illegal stuff.)
According to Gemini, Nvidia added $43 billion in direct equity stakes,$36 billion in AI compute partnerships, and $100+ billion in loan lease guarantees, which works out to $63 billion this year, $20 billion for the next 3 years, and $10 billion for the last 6 years based on it's assumptions.
So about a third, a sixth, and a twelth of their annual revenue respectively.
I think the larger concern is that both the revenue and assets/agreements depend on Nvidia maintaining sales, market share, and their share of capacity at TSMC/etc... If they run into trouble on any of those fronts, their revenue and assets could take hits from multiple directions.
I just am unable to understand whether it's a bad thing or not, you could frame it as being circular, but you could also see it as Nvidia simply giving hardware in exchange for startup equity, is that really fundamentally problematic, is it the scale at which it was done, or is it a valid but risky tactic?
It wasn't just startup equity. For example, they are backstopping agreements between customers and to-be-built data centers, so the companies building the data centers can get better loan terms from the bank.
All told there have over $500 Billion in equity deals and "future commitments" like above since July and even more after that.
Even for a $4 Trillion company, that's still quite a lot.
IMO Jensen's affairs might have been leaked because of him being out of control and making too many deals like this. The board might have wanted to fire him, but not say the real reason.
There’s a ton of circular financing in AI but I don’t see this as part of that. Circular financing is more like companies passing IOUs around. This is more like VC funding which is pretty reasonable imo.
The scale is the largest factor, I think. If vendor financing is happening in a mature multi-vendor market on a small enough scale as to not constrain supply, it’s a less unhealthy situation than when there is only one vendor.
Just like we knew for at least a year already about the sales through Singapore. A lot of people called it for what it is at the time already (see for example: https://www.ft.com/content/6b1ce190-24d4-4f39-a518-ef9dae5fa...).
And yet, things unrolled very slowly, then suddenly.
My theory is that once new CEO is found, especially if he comes from the outside, he will be highly incentivized to denounce past sins and disclose as much as possible to start with a clean sheet. I would bet that this is one of the main reasons the stock is tanking. House of cards is about to collapse, and that may be the trigger.
> My theory is that once new CEO is found, especially if he comes from the outside, he will be highly incentivized to denounce past sins and disclose as much as possible to start with a clean sheet.
Very much this. If you read the article it mentions that the current acting CEO was against investing into startups and disagreed with Jensen Huang.
Why is Nvidia financing neoclouds to buy Nvidia chips to rent to AI customers instead of owning the DCs themselves? At least it was my understanding that run their own DCs for GeForce Now for example
You might as well ask why they don't just keep all their GPUs and compete directly with Anthropic and OpenAI to make frontier models. The answer is the same, Nvidia's core competency is hardware and although they dabble up the stack they would rather stay focused on the GPU business. It also provides a degree of separation where they can bet on many different neoclouds and AI businesses, and some may fail but there will be survivors and winners.
Yeah obviously, but I just think of it in layers. Selling a product vs renting is a different business but closely related. Microsoft made their entire Cloud and O356 business by renting products they used to sell. Then to compete directly with Anthropic and OpenAI, it would need DCs to start. It can rent its own hardware back from cloud providers like Anthropic does or build DCs and rent to others and its own use.
It's basically the entire Anthropic IPO model too right? Start with the model, then get into productivity, design, and slowly other businesses and companies with your AI. I agree with another post here that Nvidia didn't seem particularly AGI pilled, but they are certainly DC pilled.
I didn't know that, I thought it was just financing deals as I never looked closely into it. It looks like the ownership is lowish in both though (from what I can fine)
What separates a company trying to “pump sales” through “circular financing” from a company with bucket loads of cash investing in startups who use their products?
How about companies who heavily discount their product to startups to support new uses for their products because it could create new demand?
I’d say “is Nvidia the only investor in this company?” If not then clearly other investors feel like the startup is an investment.
It’s a hell of an allegation to say it’s a pump and dump scheme since those same behaviors can just be smart business practice.
Why should there be a separation? If the startups using their product wouldn't have survived on their own or found other investors injecting as much money, that's a huge sign of circular economy.
At best, financing like that means any honest competitor that doesn't get on the honey train is at massive market disadvantage.
Kinda similar to when niche gets flooded by VC money. Now anyone with better product will get out-competed by people that can sell at cost or below it because they can ride the VC honey train till the competitors are extinct and they have captured the market
We did but people simply keep pretending it’s not happening.
Between the circular financing and behaviour some analysts call “channel-stuffing”, it does seem that with Jensen Huang gone, the music is perhaps about to stop.
No one seriously denies the actual activity was happening, they just dispute its implications, and for good reason. Vendors frequently extend financing with the hope of making more sales, the most obvious example being auto loans and BNPL
Vendor financing is already a sign of an unhealthy market. When widespread, almost always. If the only easy way you can borrow enough to buy a thing is from the vendor, that’s bad. And if vendor financing is an increasing, not decreasing, proportion of the finance in a market, that’s worse.
Channel-stuffing, if it is happening, is usually plain illegal.
The implications are obvious: if people are using GPU scarcity and prices as a proxy for AI demand (and they absolutely have and still are, at every level), and use it as an indication that they must secure GPUs while they can, then it matters a lot if in fact that demand is being padded out and front-loaded in various ways.
>Vendor financing is already a sign of an unhealthy market. When widespread, almost always. If the only easy way you can borrow enough to buy a thing is from the vendor, that’s bad. And if vendor financing is an increasing, not decreasing, proportion of the finance in a market, that’s worse.
I don’t know, because I am in the UK and I don’t know exactly what definition of vendor finance you’re working with.
For example, here in the UK, that is extremely regulated, and you’re usually not buying with the dealer’s money, or the dealer chain’s money. Sometimes you are buying with the manufacturer’s money (through a regulated subsidiary finance company or joint venture) but most of the time you’re simply buying with money from a regulated finance company, from which the dealer is getting an introducer’s fee (and for which they must agree to be regulated).
(I am not a driver and have no car loans but I am reasonably familiar with the business model from previous client business)
It is my understanding that Nvidia is pretty directly using their own money for this: there is a criticism that they are essentially “selling their balance sheet as a service”, and that their total exposure is about $200 billion.
Nvidia’s loans are not, in that sense, particularly comparable to even the loosest definition of auto loans. Not least because there’s no competition for the products.
This is all putting aside how much money Jensen Huang has persuaded others to loan. Perhaps that side of things won’t go away; I think we might see him carrying on that function in some future capacity. But it will almost inevitably be at a much smaller scale, because the market is significantly less enthusiastic about lending more money.
Almost none. Dealerships will arrange financing for you, but the actual financing comes from a third party financial institution. The dealership walks away from the deal with the full cash value of the sale; and maybe a kickback from the bank.
The concerning thing with vendor financing is that the vendor is supposed to be in the widget business, not the financing business. If they are getting into the financing bussiness, that is generally a sign that the professional financers don't want to get involved; which is not a good sign.
You're being deliberately obtuse. Every auto manufacturer has a captive finance arm. That captive finance arm may be operated by a financial institution, but the financing is subvented by the auto manufacturer. Chase isn't offering 0% financing on a Subaru because they like the car, they're offering it because Subaru pays them to.
This is, nevertheless, a quite different story. Nvidia does not have a captive finance company.
The concern has to be that ordinary financial institutions might not make such loans to startups, and that therefore Nvidia is using vendor finance to create sales that otherwise would not happen.
Rather than the auto loan system, where essentially the front face of an entire finance industry has moved into the dealerships but you can still get a car loan outside it.
Sure, but no matter the risk level the vendor always has the most ability to absorb defaults. It’s probably why they are the only reasonable lender in many markets
Right but aren’t you kind of underscoring the point? It’s not really the kind of vendor finance we are talking about then; it’s really just the finance industry moving into loaning other things, moving the storefront into another business. It’s pretty highly regulated.
Vendor finance of the kind Nvidia is doing is different: they are the single vendor for one thing, they are loaning to startups who otherwise might not get funding from banks, it’s coming from the same balance sheet as the product, and these loans are materially causing GPU scarcity.
In general, vendor finance of the kind Nvidia is doing is indicative of an uncertain market, and when it’s the only vendor and it causes the price of the thing to rise, that’s obviously bad.
The industry is very aware that it relies on this for its continuing growth and stability.
it's also an issue for cat companies. they get a double whammy during economic downturn because demand drops and supply rises (due to repossessed data flooding the market)
Yes, but also, vendors are best positioned and most incentivized to be the lenders for their customers. They often just provide unbeatable terms compared to all options, even better than cash for those who do have that option and ability.
A financing company usually is fully taking the credit risk. They have to charge a high interest and hope their underwriting process is sound. That is generally the only way they make money from the transaction.
A vendor can give 0% interest or even a discount to financing customers because they are protected by the profit margin of the transaction. They can also have a looser underwriting process and take more credit risks while doing so.
It was talked about for so long people stopped talking about it because it got a bit boring and felt futile, in a "I guess money is fake when you have enough of it" way. It's _incredible_ it's coming out now, if I can excuse going tinfoil hat for a moment, it's like they're trying to pin everything on Huang while they have the chance.
Nvidia wants to ensure data center companies that are optimized for AI like Nebius stock their buildings with Nvidia chips instead of AMD or ASICs so of course it is smart business sense to partner with them or take stakes in them.
Nvidia gives Nebius first access to their newest chips, ensures they get deployed at top performance, allows Nvidia to recognize the revenue upfront, and ends up owning equity in the upside.
Nebius gets the best chips first, gets cheaper financing due to the obvious security granted by having one of the most valuable companies in the world standing behind them, etc.
It sounds like a mutually beneficial deal rather than something shady to me.
By the way they report demand is 10x supply so I think everyone in here hoping for some cheap GPUs soon is kidding themselves. Eventually RAM might get cheaper because it's easier to build new factories to produce commoditized RAM but TSMC is the bottleneck for advanced chips and it isn't resolving anytime in the foreseeable future.
Nvidia was 226 in August (14th)
Today 161... So is also massively down, and not just since the last few days, it's been trending downward for months.
But Jensen also sold 1B of his stock over that same time period, that would also deprecate the value through higher availability. And he may continue to, especially now.
Buying the dip is a strategy here that'd be incredibly spicy, but ymmv. It's also possible that it gets a new height, unlikely but markets aren't rational so impossible to predict
Right, that quote kind of undercuts the whole scarcity story... Sounds more like the chips were piling up and the bottleneck was power and buildings, so financing the buyers was a way to get the inventory off their own books.
Everyone is talking about the circular financing but this is the key takeaway from the WSJ article for me.
> Then he went on to describe the situation the company was in. Major cloud providers were running away from Nvidia, making plans to use alternative chips and lessen their reliance on the firm. Even worse, Huang said, the vast supply of chip wafers and memory Nvidia had committed to buying were coming at him like an “avalanche.”
Jensen's son-in-law was making these vendor financed deals and Kress the CFO now interim CEO was against them.
Large customers like Nvidia and Apple want billions of chips. TSMC can't just ramp up and down instantly. It takes 3+ years and $30 billion to build a modern fab. So TSMC has contracts where you are commiting to buy the wafers for years in advance.
I've worked for multiple fabless chip companies that use TSMC to manufacture. Amazon, Google, Microsoft, and the other big hyperscalers are making their own AI chips to move away from Nvidia. The startups like OpenAI are doing the same so the real demand for Nvidia chips is dropping. But Nvidia can't easily get out of the contracts with TSMC to manufacture and buy the chips. They would probably have multi billion penalties that would show up on their financial statements.
Some people think Nvidia is acting as a VC fund for AI startups but my view is that Jensen freaked out about the dropping demand for Nvidia chips. So he is funding these startups with circular finance deals to buy the Nvidia chips that he can't sell to the hyperscalers anymore.
> Nvidia can't easily get out of the contracts with TSMC
So, supply was committed, but demand was not. That explains actions like these [1] to finance demand. The challenge for them from a business point of view is to dominate datacenter footprint with increased supply, while balancing demand with high margins - in the face of increased competition. I would guess that the marginal demand from startups and neoclouds is already inflecting downwards due to funding constraints and datacenter bottlenecks.
I think Jensen was thinking shorter term and Kress the CFO was pushing back.
But if you ask me to predict what will happen, 70% of the AI startups will go bankrupt, 20% of them will get bought by bigger companies, 10% will succeed on their own. That's just my generic take on tech startups in general.
This article is 6 months old but basically Jensen is saying the US should keep selling chips to China so that we don't force them to design their own AI chips. That would be bad for Nvidia sales which is the same thing that is happening with US hyperscalers moving away from Nvidia.
40 year old gamer here having a flashback of all anti- competition practices Nvidia sustained for decades. Who here remembers GameWorks and PhysX effectively sabotaging multi-vendor optimization in titles like Witcher 3 and Watch Dogs? Expensive Gsync monitors? Trying to force OEMs to be GeForce partners in exchange for full GPU support? Forcing EVGA exit from the market? And then completely shafting gamers when crypto and AI markets opened up?
I also had the displeasure to work with nvidia. After years of pushing gaming cards on us for compute, the years I spent working with nvidia was full of conversations where they would list silly excuse after excuse as to why we should use the expensive enterprise-grade cards instead. All the while, we begged them to unlock driver features that were available to Quadro cards but not GeForce cards, features as simple as hardware acceleration pass-through on a remote desktop connection. It took them a full-on epidemic, where remote work became super common, to allow some of those features to GeForce cards.
So it's really on brand that they tried creating a fake scarcity to keep their prices up. I don't envy the situation Jensen is in but I won't be sorry for him.
Thanks for sharing the video. What's funny is that YouTube tagged a 10 year old video as AI-generated. Google is another company that's fallen hard from grace.
If you are old enough to have seen Google under their founders (bunch of CS PhD program geeks) vs modern Google (which is almost entirely run by McKinsey MBA types), there is a ton of difference. Ask any older guy who still works there. The same thing happened to Boeing.
Don't Be Evil was never about not doing any evil. It was about the understanding that Google engineers were aware of their company's increasing power and influence, understood how their actions could cause great harm to society as a result, and were concerned enough to put their foot down and force management to codify the recognition in the corporate ethos.
Well - the situation with his wife or being unable to control his Jenwong or whatever one would call it, is still a private matter (the allegation of the spy situation is a bit more complex, but the other affair he had going, or at the least one, losing track here of his personal love life), is at the end of the day not really something that is or should be in the spotline for others, even though it has already generated tons of meme videos. People are very happily putting memes about the ex CEO right now - he is probably one of the top #3 meme people right now. The other day I saw where he approached two female podcasters; it suddenly had such a creepy vibe, given his weakness for females ... (though that was not a meme as such, just some seemingly accidental Jensen sneakily creeping in situation ... can't stop him zooming in on the ladies, apparently)
But customers having to pay more due to NVIDIA milking them - now that's something that really would require mandatory jail time for all NVIDIA folks involved here, IF true and verified in court (right now we can only speculate, even if we have extremely convincing proof; the courts would have to come to such a conclusion at the end of the day; and for this, the court systems have to work. I have severe doubts the courts work in the USA right now. It seems a billionaires-controlled court. Why is the whole Epstein network not investigated? Why is only Ghislaine in jail? A single person master-minded +5000 sex slaves over some 20 years or so? How is that even logistically possible?).
> But customers having to pay more due to NVIDIA milking them - now that's something that really would require mandatory jail time for all NVIDIA
It’s the task of every capitalist business in existence to “milk” their customers for the maximum amount of money they can for any given product. Everyone in business would be in jail by your metric.
Sure, not all businesses, but just like the consumer social classes their is the same sort of heirarchy in business, the top n percentile including big tech, oil, large chains, etc, are absolutely operating in the milking game.
I'm not arguing the on-paper, I am saying in reality, it's not exactly looking all fair and even as intended; en contraire + it looks much the oposite.. in my opinion.
Well that sounds hyperbolic considering “capitalist business” runs the gamut between “trillion dollar company” and “guy down the street doing this in his spare time”
Not defending NVIDIA by any stretch, but I think Intel is the only one that allows ‘enterprise’ features on their consumer cards, like SR-IOV.
Such a complete failure of the market that NVIDIA hasn’t had any real competition. All of the vendors abandoned PC gamers though. Though the price choke point is memory, not cores.
Which makes me curious, if AMD did another HBM-based card like the Vega series, would that RAM be cheaper now than GDDR?
many have asked why AMD doesn't make its GPUs cheaper.
lisa su and jensen huang not competing with each other on price and being related is as much of a coincidence as wuhan having a virology institute experimenting on COVID-19 and being the center of the COVID-19 outbreak
It’s been confirmed by agencies around the world including the rather conservative German BND [0].
It’s not a conspiracy theory - it’s fact that COVID-19 is of Chinese lab leak origin. The only open question is whether that happened out of malice or stupidity.
No. A bunch of agencies have started favoring the lab leak hypothesis with low confidence after recently reassessing the evidence. The BND has apparently favored it from the very beginning. Some others still back zoonotic spillover.
In any case, I'd wager no non-Chinese intelligence agency has the evidence to ascertain COVID-19 origin one way or the other.
Both the initial confidence in natural origin and now this new certainty in declaring the lab leak hypothesis a fact seem nonsensical to me.
There was an article on here just a few days ago about an Nvidia crypto GPU that was sold a few years ago. This lady discovered that via voltage glitches she could turn back on features that Nvidia had turned off. She had cards that were sold with only 8 gigs of VRAM enabled that actually had 80 gigs of VRAM.
selective binning of semiconductors is not a new or inherently evil practice. that being said, someone managing to get a 170hx to 80 gigs is possibly the most prominent example of unlocking manufacturer restricted features.
You can't change the HBM configuration after the GPU is manufactured, so I guess this points to some combination of "redirecting GA100 stock", "volume is too low to justify a separate spin of GA100" or "demand is expected to be transient". The savings from actually shipping less HBM would be very substantial though (hundreds of dollars on a 4-5k GPU).
As another almost 40 year old gamer, I find myself wondering why nobody else ever brings up 3dfx when discussing Nvidia. I've been salty with them since the buyout and I've remained an ATI/AMD user all this time because of it.
That is suggesting 3DFx does not allow support Glide for other graphics card. and Apple Lightning Made for iPhone programme is as bad Gsync Monitor certification. When they were the one to ensure quality matters across the whole spectrum. Just the same as Apple. And the reality it is just business.
Have they been pushy? Hell yes, I guess everyone have a different line on this. But on the scale of business partnership and leaving money for its ecosystem, Nvidia is far from the worst. Just look at Apple, or in other industry, Walmart. ( Note: Steve Jobs used to be pretty good at that, the same as Jensen. It was actually Tim Cook who pushed this to previously unseen level )
>And then completely shafting gamers when crypto and AI markets opened up?
I believe Jensen was the one who continue to push capacity in Geforce for consumer market when they could have done 100% AI. And there just isn't enough capacity for everyone. And had AI and Crypto not been that popular the R&D cost of amortised over GPU would have been far higher on leading edge node with Big GPU design, often pushed to Reticle limit. Not only have I recounted exactly zero appreciation on any technical forums, consumer simply want their GPU to be faster, cheaper and widely available every single time regardless of its cost, when it was Nvidia who is pushing the whole GPU industry forward.
> I believe Jensen was the one who continue to push capacity in Geforce for consumer market when they could have done 100% AI
Investors like it (a lot) if you have diversified income streams. Sure, currently gaming is not the profit driver for Nvidia but it still adds to the valuations and having a Cuda capable GPU in a lot of homes is great for the ecosystem.
> And there just isn't enough capacity for everyone.
You are in a comment thread related to an article about Huang intentionally engineering that shortage by investing into AI startups. Why do you need to defend a billionaire?
NVIDIA has been terrible to countless groups over the years(even more than you listed). They survived by being really good. You know who else have been jerks? Every other leading successful tech company (NVIDIA is nothing compared to Microsoft's misdeeds for example). Microsoft still going after 51 years. And now a new generation having never remembered the browser wars have fully embraced Microsoft products like VSCode. Your trip down memory lane reminded me about the numerous 'gamer boycotts' that all failed. There used to be a meme about how people signing a pledge boycotting a title would then be seen 'online' on Steam playing said game. At the end of the day most consumers didn't care. They wanted the best products and NVIDIA more often than not delivered. A company that is super polite to all their customers and partners is a company that will still be dropped the second their products stop delivering the value that customers expect.
Google used to be not jerks, Valve still are. HP - often considered the company that started Silicon Valley - were somewhat famously not jerks for a long time, but that ended decades ago when Hewlett and Packard left.
In the 1970s, installing the $500 power fail interrupt feature on the HP 2114 minicomputer was done by clipping a jumper.
Companies price based on perceived value and customer willingness to pay, not on cost to produce.
HP weren't alone. About the same time, modifying one of IBM's line printers to the more expensive, faster model was done by changing out a couple of gears.
Valve aren't jerks, but they are stealthily inflating game prices by 30%. That massive fee is being paid by the consumer, even if the consumer doesn't realize it.
That's very ignorant perspective on it. 30% is very much standard cut in near any kind of online gaming stores and Steam's on average is lower than that.
Yes, they could drop the price for indies but they do have progressive tiering, at top you pay 20% to them and by revenue split it's much closer to taking 20% cut on average than 30%. But yes, indies are being a bit screwed there.
... if not for the fact every single cheaper platform will still get you massively less sales just because they can't compete on feature, let alone popularity of Steam.
Also the 30% funded ability to play games at all on my Linux box so I'm fine with paying the extra.
> Valve aren't jerks, but they are stealthily inflating game prices by 30%.
Nah.
From what I've heard from folks who used to do bricks and mortar distribution, that 30% is _way_ better than what you'd get cut out in that system. [0] From the perspective of the person publishing a video game, you also get waaaaaaaaaaay more for your cut with Valve than you'd get in a B&M distribution. _So_ much more. The same is true for the purchaser and player of video games.
[0] If for no other reason [1] than the fact Valve will sell your game forever, unless some government or powerful payment processor very strongly demands that it not be sold.
True. As much as we hate on companies like Microsoft and Nividia, or people like Bill Gates and Elon Musk, it has to be acknowledged that above a certain level, it's a eat-or-be-eaten world, and I'll never reach that level.
>We should celebrate their fall, maybe there will be room for some real competition.
How are you going to get more competition when the entry cost is so high? The only competition will be the Chinese willing to dump endless cash into this but they are not doing it out of the goodness of their hearts either and it will still take years. If NVIDIA starts to falter then in the short term things will get even more painful for consumers as AMD becomes the new crummy company people love to hate.
What you need is for the interfaces people use to not be vendor-locked. At which point Nvidia doesn't have to "fail" in the sense of going out of business, but rather just have the ecosystem switch to APIs that are supported by not just them but also AMD, Intel, Apple, Qualcomm, etc.
At which point customers are buying for hardware price/performance or performance/watt rather than because they care which vendor they're getting it from.
And then you'd still have the biggest companies making the highest performance hardware, but you could also get something from the RISC-V people which had e.g. half or a quarter the performance of the enterprise GPUs but the same amount of VRAM, for less money.
This is the sort of self defeating mentality that creates evil monopolies. I used to read gamers berate AMD for their "driver problems" when their drivers simply couldn't emulate Nvidia's intentional tricks to force game developers to build for NV cards. And then they would moan when card prices skyrocketed. Don't know why you think AMD is "crummy" their greatest sin is that they didn't play these anti-competetive games and were screwed by other companies.
People seemed to be programmed to be sycophants or at least willing victims to rich and powerful people and companies, even as they royally screw them and empty their pockets. I never understood it. As the song goes: we'd make great pets.
The barriers to entry are not capital costs they are compatibility moats. Wake up and smell the coffee.
I always thought that Nvidia's presence in the Khronos Group was a farce. On one hand they were vendor-locking as much as possible at the expense of the industry, and on the other they were "contributing" to the open languages and protocols.
Dirty secret of "open" source: it's a strategic collaboration between big vendors. It's very rarely someone's hobby project. Almost all Linux changes come from hardware vendors.
"The reason behind this was to maintain the perception of ongoing high demand and to move an oversupply of semiconductors from TSMC."
Huh. The circular financing was figured out a while back, but this is something I had not seen before.
This could all work out. NVidia stock drops. AI company stock drops. The more efficient approaches to inference and more open models take over for most mid-level applications. The need for insane numbers of data centers is reduced. AI works fine and costs less.
I am not entirely sure how this is circular financing. And how it is creating supply and demand curve bent to Nvidia's will.
These Startups or companies wanted Nvidia's GPU. Nvidia is helping them to finance it. That is basically Apple Upgrade programmes using the companies share and its GPU as collateral. Had zero start up being using Nvidia, the demand from Hyperscaler alone is enough to fill up all the current supply. And that is ignoring Gaming market.
This largely works because the current AI bubble demands drive the market price of Nvidia GPU to new heights ( along with RAM price being 5-10x of that is was ). Nvidia commands margins of its GPU allow them absorb and finance this operation with relatively very little risk.
The claim is nvidia is making the chip shortage look severe by overbuying chip production - and then pushing those chips downstream at artificially high prices using circular financing.
Of course the question is: is there an actual chip shortage or not? How much of Nvidia’s strategy creating a fake shortage? Just noticing there’s a shortage isn’t proof that a lot of it isn’t artificially manufactured.
Not sure if there is actual chip shortage (CPU prices don't seem to soar up and it's same fabs making them) but the circular financing/chips stuck in warehouse at the very least increased the DRAM shortage
I agree completely. Nvidia is clearly trying to diversify its customer base, not least because all their big customers are developing their own hardware to compete with Nvidia chips.
Nvidia net profit and cashflow are well above >100bn, they have approximately zero debt in relation. If some of their investments fail, and they will, I'm pretty sure nothing will happen at all beyond a write-down. It's also not obvious at all how this is bad practice on nvidias part, what else are they supposed to do with all that money? Let it depreciate in their account? Distribute even more than the 30+bn they already do to shareholders?
Larger supply of capital means lower cost of capital for the borrowers. Would these startups have been viable without lending from Nvidia?
At the end of the day, these arrangements are a sort of discount on GPUs. Is it a good sign if Nvidia needs to give discounts to sell their GPUs? Do we actually have an oversupply of GPUs if Nvidia wasn’t manipulating the market?
I see it more as leveraging (and also diversification). NVIDIA gets a pile of money. Rather than sitting on it for no purpose NVIDIA doubles down on AI success by purchasing ownership in AI companies that use its products (although not exclusively its products).
This way even if some other hardware eventually powers AI, NVIDIA will still benefit. The only thing needed for NVIDIA to continue doing well is AI as a whole to continue doing well. Which is almost given.
The fact that well financed NVIDIA customers now buy more NVIDIA products is additional benefit. So what NVIDIA is doing financially seems like a no-brainer.
I have no investment in Nvidia and have no reason to like them or hate them.
But I think this is backwards. I remember 4-5 years ago waiting for AWS and GCP to schedule us an 8GPU machine (gcp had 16 even) for hours while paying them crazy rents for the GPUs that paid the hardware in 2 months of usage. This while components and servers were actually cheap.
The hyperscalers are monopolies that eventually some admin will grow balls and will have to break up. But this is wishful thinking and nVidia didn't do a bad job working them around. Now with other monopolies drying out components like RAM from the market, one can actually rent GPUs with less effort from neoclouds.
It doesn't seem like anyone's going to be breaking up any monopolies in the US anymore in the near future, if ever, excepting some really massive sociopolitical shifts.
I live in Switzerland and I am not directly invested. But the Swiss national bank owns many us stocks. Pretty sure we are all somewhat connected to nVidia.
Lots of comments seem eager to declare everything over, done for, and said, and that doesn't seem to be nearly the case. The eagerness to declare it over is, I think, reflective of a desire not to examine the idea that actually the GPU demand really is there.
Maybe the real retrospective on this will be on how the news was able to forward such shaky narratives around financial doom for so long despite the underlying facts not matching.
Half the room is still entirely against this AI thing on an ideological basis. I have observed several developers using AI tools badly on purpose (malicious compliance) in order to further the narrative that this could never work out. The prospect of some AI 9/11 transpiring (they even halted the flights) is hope to these people. A certain cohort needs it to fail.
As a result they never seriously pursued frontier research for open models - which could have easily absorbed any excess compute they planned for.
On the other side their customers are rapidly becoming their competitors and will happily eat up spare capacity at TSMC if nvidia can’t fulfill its obligations.
Edit: to be fair there are several counterfactuals that could have played out negatively if nvidia decided to go into frontier research or go upstream like Elon and build their own fab. Jensen himself said they were completely focused on building general purpose compute and his bets had turned out to be right so far.
To be fair their Nemotron models are pretty good. The Parakeet speech-to-text model is also pretty good. That being said these pale in comparison to the frontier labs. They should've invested more into it, but I understand that they don't want to piss off their biggest competitors.
A friend of mine works on Nemotron. He stated quite plainly that they intentionally don't push the boundaries for the reason you state. It's similar to when companies create reference designs that show off the features of their real product, like Google and their Pixel phones
What would investing in the models give them ? They already are selling chips at massive markup.
Investing in tooling so more people get on their stuff is direct return, but having yet another AI model is of little value aside from being a test bed for their AI tooling
I wouldn't disagree with that. Astra was the first model that is actually really smart, doesn't constantly hallucinate, writes high quality code etc.
If it isn't AGI, it's at least something that shows that "AGI" is not a useful label. You wouldn't argue that we don't have Artificial General Flying because planes can't flap their wings.
A plane or a drone can do any aerial movement a bird can (in a shorter, less energy efficient manner). Can Astra do a software dev job alone without supervision? Let alone any other job.
Worse, I think companies that warehouse gpu's will buy newer more efficient gpu's by the time they get their data centers running but won't resell the older but unused gpu's afraid to let their competitors to make inference.
Isn't that straightforwardly explained by typical hoarding behavior, not " afraid to let their competitors to make inference"? During the pandemic people were hoarding TP that they couldn't possibly use within a reasonable amount of time, but it'd be crazy to accuse people of doing that because they were afraid of their neighbors having clean asses.
>If you cannot wipe efficiently, you better make sure nobody else can too so that no-one can call you out on that.
But so far as we can tell, American proprietary models are more compute efficient than open models? They're also practically cheaper, if you factor subscriptions into account. Does that mean we should be decrying all the GPUs used for GLM, when they can be put to better use for claude or chatgpt models?
I don't care for Nvidia, witness all my PCs using AMD cards for ages and never wanting to buy their stock because some of their practices I disliked.
But I think this is at least to a degree tinted hindsight - it generally makes some sense to have an interest in funding customers who might grow to be even bigger customers. And it's been totally public for ages.
AMD is smart enough to just slash their consumer GPU output by 80% and directly spit in their consumers' face, rather than supposedly go through this game.
Most here are missing something very important: since forever, corporates do all that is in their power (mostly legally or gray area, but sometimes even illegally) to make more money.
Nvidia is to blame? Maybe yes, maybe no. But who really need to be blamed is who is there to control! What is really broken is the control & accountability feedback loop.
No? Whatever banks were trying to do in 2007, it wasn't "engineered scarcity" or even inflation. The only overlap is that lending is involved and people hate it
While I generally dislike scaling consumer finance up to larger markets, to go with your analogy.
Isn't the "credit" that Nvidia extended secured by the value of the GPUs and Datacenters the creditors end up buying/building? If so then should the value of those things suddenly plummet Nvidia is left holding billions in junk debt?
Yes like iterate appeals to neutrality by people with inherent skin in the game
People who are inherently biased to select themselves, thus upending any rhetorical appeals they are capable of the mythical perfect neutrality they appeal to via generalized words
People don't have to be neutral. Neutrality between good and bad is mediocre. If you disagree with them make an argument, don't just lament the end of enlightened centrism.
Was funding openAI a smart move which allowed Nvidia to capture the value being ingenerated downstream, or was it engineering scarcity?
My view is that it can be both. However the idea it was solely driven by a desire to engineer scarcity is absurd.
I worry the mindset which sees it in such stark terms would never have built CUDA at a gaming GPU company.
Jensen was a philanderer but also a visionary CEO and I don't think it's likely he would have seen temporarily boosting demand through bad loans as the right strategy.
Even if NVidia crashed and there ends up being an oversupply of GPUs or TSMC fab slots, this doesn't change that OpenAi and Google still need memory for their own hardware accelerators, so the price of boards wouldn't go down by much
Part of me wonders (maybe naively) if with falling cost of AI inference and improvement of models means there is an oversupply of inference infrastructure. since we may reach a point where no one needs more and everything you could want can be done by the machine and adding more compute for most users is not any kind of benefit (like it was before LLMs there was an obvious ceiling where the majority of people did not need more compute).
I know Jevons paradox is a thing and I could see it going the other way as well but the first possibility seems to be ignored and I am not sure we can. Eventually demand for training might dry up as well if are models become largely very good and only a bit of fine tuning is required for most applications.
I don't see how it helps to think so narrowly about the computation needed solely for training when we are clearly headed to a future where tons of realtime applications (think robots) need to do insane amounts of processing ASAP while doing time-sensitive tasks.
IMO its copium to think that chips which have 10x more demand than supply are suddenly going to be easy to get as "AI is eating the world" like software did over the past decades.
I think there is a question of how much of that demand is real. If GPUs are sitting unused in boxes and/or if NVDA has been artificially juicing demand either through basically buying them from themselves or selling them to China through an intermediary then the 10x demand comes into question.
That leaves the real buyers who are also starting to run low on capital.
Finally, demand doesn't need to go to zero for there to be a price correction. Just dipping from insane demand to elevated levels would lead to a significant price drop.
You are definitely right, mrgordon - this isn't an infinite scaling, "one extra copy cost essentially nothing," software issue. Video cards are physical. You can't just sell more copies with almost zero marginal cost like software. Each video card is a physical good that is subjected to all those physical laws.
I was not trying to deny the corporeality of GPU's (or cpu and memory), only that there might be an oversupply given the rate of buy up of these things and the amount of start ups who have brought these things and will fail and liquidate or liquidate hardware as they pivot or go into just offering inference.
Secondly that the frontier model providers will not necessarily want to buy these up as the aforementioned lower demand for training (or costly and memory intensive training) and cost of inference goes down (and possibly requests as the models get better or at least plateau).
Further TPU's and if model weights do eventually stabilize then ASIC's might make more sense.
And lastly as models improve and make less mistakes the requirement trying things in parallel traditional compute may also go down. I think their is a quantity intercept (The demand for compute if it cost nothing would be a finite number and may go down rather then up with advancements in cheaper inference and accuracy) for compute both AI inference and traditional compute.
real time visual data processing for these applications seems to me to not be that expensive and the thinking part will be done as a swarm. There is some real quantity intercept for the demand of compute that does change over time but one can imagine it going down with better inference not to mention ASIC's.
I think there are two sides that want a particular outcome one want gpu's to get cheaper (like I admit I do), others want there investment to work out (both might want to huff copium at some point, who is huffing here is not easy to tell).
The author is a developer working on software that scales to 1,024 cores and greater -- which is within spitting distance now thanks to 256-core AMD EPYC processors. If you count hyperthreads as a "virtual core" then a dual-socket system gets you there!
That blog made me realise that almost all software can't utilise 1,024 cores, not even close! Microsoft SQL Server, as a random example, tops out at 64 cores for any single query.
Similarly, people couldn't utilise a machine that big, not with pre-AI software, except for certain embarrassingly parallel codes such as simulations and 3D graphics rendering.
Now... NOW... there's no upper limit. None. One person(!) can cheerfully utilise millions of cores, billions even, and there's no end in sight.
If you think one conversation thread in "ChatGPT" is all we need, you're not seeing the big picture of what's possible here.
Those math proofs OpenAI produced were created with tens of thousands of agents running in parallel, orchestrated by thousands more agents, and overseen by hundreds of agents, all triggered by someone typing as little as a sentence or two to start that avalanche of compute!
With that kind of AI power at your fingertips, huge, unthinkable projects become a fun exercise for the weekend:
- Translate the entirety of Wikipedia to every human language.
- Rewrite the entire Linux kernel to Rust in one go
I am arguing that their is an quantity intercept (The demand for compute if it cost nothing would be a finite number and may go down rather then up with advancements in cheaper inference and accuracy).
Sure you can do all these things you mentioned but eventually even if it was free they would be done and doing some of these things your self would be annoying and a waist of time. Once some has formalized a proof why would some do it again and why would some one rewrite a program again, it will still take time and human effort over just using it. If you just spend 1 minute with each agent of your say 10000
I really don't think most people want to be running tens of thousands of agents and would not find a need for that many agents. if you it takes you just 1 minute of looking at output of your agents that would take you 1 year and 52 days. I think you have to admit there is a limit. Though I could find busy work for my agents, you could do the same with computing before hand such searching for primes, there is a limited thing that people want out of their machines is my point and people who would run such things would be a minority if they exist at all.
Same. I replaced the pads and paste on my now ancient RX 580 in the hopes of surviving to the next time prices are affordable.
For anyone wanting to do so - you can! You have to make sure you nail the pad thickness though. That can be tough because it can have changed between revisions of the same card. Thankfully, AI is pretty good at combing through past data to figure out what you need. Also it voids your warranty.
Which can work, but probably not indefinitely? If/when demand slows the prices on all of the hardware goes down, Nvidia's earnings fall and then the stock price.
So I was under the impression that Jensen had arranged early deals with every chip maker to lock in a good price for basically the next 10 years, but it meant that nVidia were obliged to purchase them.. So they the needed the scarcity and demand to be constantly growing or else they would still be on the hook for the chips coming over the next ~6/7 years regardless? I'll try find the article.
I don't understand. You can't possibly make more money by buying from yourslef via proxies. Yes, that would raise prices but you could have just raised them yourself at will to the same effect. Is the article alleging a stock pumping scheme?
You raise prices on the back of scarcity that you quote your customers "sorry but because there are so few GPUs and your neighbour is paying double as much, that becomes the base price" - that the neighbour is actually getting a cut isn't mentioned, that scarcity is faked by investing in companies that buy GPUs (perhaps only on paper) isn't mentioned, and the fact that it's all just pure capitalism and how it is played is ignored.
Why are folks getting all excited? This is the game called capitalism that we all wanted and that we all know is the best ever system discovered to rule over others. Folks are getting annoyed because they didn't profit from it.
Just like Amazon becoming a loss leader in many markets off the back of AWS profits. They enter a random market, undercut the prices until the competition is removed and then they raise their prices. Rinse and repeat. All because they are making huge profits on AWS and can cross finance this strategy.
No one is complain about that. Because Amazon is on the good side of capitalism. Why Nvidia is now on the bad side of capitalism - who knows.
The shenanigans her team pulls off for pure market capture (timing of releases, formats, etc) against specific artists that pose a threat to her dominance is well documented. So, yes
Forgive me, but I feel the take you describe is part of the broader problem we are experiencing now.
<edit> oh god, I just re-read my response and face-palmed at me. I'm trying to think of how to express what I mean. Here's the shitty version: Dude says "this article doesn't really show any evidence - is just impression." You say, effectively, " do you have any evidence that they don't have evidence?"
Not the greatest of retorts, but I feel compelled to let it stand. I hope you get a little bit of what I mean.
It is completely normal and expected for large companies to invest in others who can use and grow the use of their products. It’s equivalent to a microscope manufacturer investing in a microbiology company.
Here’s a quote about Henry Singleton, one of the most successful ever:
“CEOs need to do two things well to be successful, run their operations efficiently and deploy the cash generated by those operations.
Most CEOs focus on managing operations. Singleton, in contrast, gave most of his attention to the later task. As Warren Buffett observed, very few CEOs come prepared for this critical task of capital allocation.”
What happens to neoclouds when the bubble pops. nvidia stops circular financing, and all of a sudden they can’t pay their debt. This leads to the DCs getting bought cheaply by hyperscalers and you have a monopolistic AI market with google/fb/amazon and likes are running the show again.
I feel there's just enough value behind the crazy proposition that there won't really ever be a classic .com bubble pop. That's the thing: there actually is a lot of value in this tech. May some of the current big players crash and burn? Sure. But the tech is undeniably powerful - things will, and are, changing.
It's not about value, but return. Everyone likes to mention circular financing, which in of itself isn't an issue. If I have an amazing idea and NVDA wants to loan me money that's fine. My idea works out and we all end up billionaires.
The problem comes in if my idea doesn't end up generating a return. NVDA has not only sold me my GPUs, but it's also leveraged itself to my return. Repeat this across many businesses, none of which are generating returns yet. This is why when/if this unwinds it's going to be pretty catastrophic. As Charlie Munger said, "There are only three ways a smart person can go broke: liquor, ladies, and leverage".
Sorry deaux, but I can't quite understand your response - you're using a "I disagree with you" format, but it sounds like you agree with me! Can you clarify a bit?
This framing is absolutely ridiculous. Nvidia is trying to diversify its customer base away from an oligopoly of hyperscalers and create demand for its product through vendor financing. Any scarcity is clearly incidental and a result of capacity constraints.
You can criticise it as a risky financial structure, but claiming bad faith is totally false in my opinion.
LLMs and GenAI in general could have been a useful technology that could have grown at a normal rate and been useful the whole time. Instead it was overhyped, stuffed into everything and most importantly over financed so much that it has become a bubble ready to burst and poised to bring a lot of pain to a lot of people.
"Nvidia has been one of the worst trouble spots we’ve had with hardware manufacturers. And that’s really sad because Nvidia tries to sell chips – a lot of chips – into the Android market. And Nvidia has been the single worst company we’ve ever dealt with! So Nvidia, fuck you!”
—Linus Trovalds, June 2012
The article from WSJ that this article is based on tells a completely different story. That it was Jensen himself who was considering pulling out from supporting smaller players because the shortage was forcing bigger ones to look for alternatives to Nvidia.
The conclusion it was doing this to create artificial scarcity is made by the linked article, based on, well nothing. It might be correct, but it's not what the referenced article says.
Many HNers didn’t know and are now speaking in hindsight. (They love doing that to appear smart) Otherwise they would have shown the receipts about it years ago.
Nvidia did a great job at engineering a central bank-style AI funding bubble for as long as possible. Unfortunately, Cisco did the exact same thing.
Before, there was denial about the circular financing bubble, now look at them believing that a crash is coming.
What scares me is that anybody could believe this garbage. It costs me $1 to make, I sell it for $5. Good deal! In fact, such a fabulous deal, I'm going to do this: Make 2 for $2, sell one for $5, then loan these other dudes the $3 I made in profit plus go $2 in the whole for a total of $5 so that they can give me the $5 back.
The more often you do it, and the greater the margin becomes due to squeeze, the dumber it is.
The first time around you sold a GPU for $5 and took payment as 5 startup shares at $1 apiece. Now you go back for round 2 and the startup says their shares are trading at $5. Will you still loan them the money and exchange 1 GPU for one share at $5?
You get less and less of their company each time and you've already peaked because future funding rounds can't keep being valued higher.
The trick only works once but everyone thinks it's a perpetual motion machine.
What you see is liquidity demands outpacing the system's ability to supply, and this his how industry partners in the chain keep the cause spiraling upwards.
I mean, preventing bubbles is literally the reason short sellers are allowed to exist. When they see a stock that is overpriced, they help it correct. Innocent people lost a lot of money on Enron.
Sorry, ramshanke - there really is a lot of promise to this tech. Will some of the current big payers collapse int he process? Definitely could happen. But there's no way around it: there's a lot of value in this new tech, and it's here to stay.
Well nobody expects a big shark to blissfully swim in the same tank of — among other — Larry Ellison, passively waiting to be chowed down.
The other cloud providers are building (copying) their own hw/sw stack so the least Nvidia would do is to standup its own cloud… indeed it’s what Jensen has been doing all along, the smuggling allegations are likely to be overblown.
Lol the guy funds startups and suddenly that's a crime. If they didn't fund startups, they would be blamed for not supporting the ecosystem enough. What a farce.
Terrible reporting all around this situation, especially by NYT and WSJ. Then all the other news sources repeated the same nonsense.
- Singapore govt issued a statement clarifying that WSJ fabricated facts. [1]
- It's been clarified now by the President's Council of Advisors on Science and Technology that there is no convincing evidence that Alice Huang is a spy. [2]
- The statement that Jensen called the new interim CEO ‘a deer in the headlights’ actually hurts NVDA stock, as it lowers the confidence of investors in her and I'm sure WSJ knew that before posting this speculative article with no cited source.
This looks like a hit job on Jensen and Nvidia. NYT and WSJ have spewed false facts with no credible sources (just "anonymous" sources) to discredit Jensen as much as possible and hurt NVDA stock. Jensen probably cheated on his wife, but mere cheating is not grounds to remove a very competent leader from the company he created.
I honestly don't think this should be even a question at this point. This is systemic and organized. The pattern of the takedown is recognizable as well. That NYT and WSJ are teamed up is also informative.
I wonder: Is Jensen Huang the Jack Ma of the capitalist world?
In what worlds would Nvidia not invest in adjacent startups?
In what worlds would these startups not be encouraged/obligated to use their investors hardware?
Been saying for years that we’ll be seeing a wave of bargain-priced GPUs, memory and hard drives before long. Maybe they can turn these data centers into Amazon distribution centers or apartments.
What's funny is that I built a computer for my son exactly a year ago. I think we spent 550 Euros on a 5060Ti 16GB. Today the same exact card (half-length) is >1040 Euros: https://www.amazon.de/dp/B0FDQXHYFW
Every other component has also gone up in price, bigtime. Especially the SSD.
This is, I think, unprecedented. I'm old enough to remember when a 1-year-old computer was considered "old" and all computers would depreciate fast.
Prices sure have got a long way to fall before we're back in Nov 2025 territory...
Sorry to see you get downvotes, xvxvx, for an honest (but I feel very incorrect) take, but I understand their impetus: there is a lot of value and power in this crazy new tech. Some companies may bite it, but the cat is out of the bag - in some form or another, the new AI technology is powerful and it isn't going anywhere - and we are already seeing the significant value it provides.
If it's the case that for years you've been saying it's right around the corner, you've been wrong every time so far. That said, this time you still want credit for being right?
Like all bubbles it comes to an end when people state the same thing we knew five years ago but suddenly have the clarity to understand why it is stupid. But only after the stock price goes down.
So the CEO 'laid into' the CFO but sounds like she didn't push back all that hard. Seems like something leaked by Kress to make her seem clean, but just makes her seem dirty and weak.
If this is truly a problem, it's her job to say no to the CEO. They need to clean house at the top and hire someone like Johny Srouji to right the ship.
Depends, you buy a used server off of eBay or 3d print your own fan shroud. Waiting for prices to drop some and then I’m looking to build my own rack in the basement, so I can use open weight models and not directly support horrible data center practices.
Not for gaming they don't have monitor outputs and most of them aren't even in a standard PCI-E format. Some of them might be useful as a home AI accelerator with adapters and jerry rigged cooling.
Some of them, sure. You can invest in a server mb, and put a rack in your shed or basement. If someone was selling B100 like that, I'd happily buy a few for 15k. I somehow doubt its going to happen though.
I am not sure how inference constrained we are, btw. As an enterprise customer, I have zero problems with 429s and capacity from google or aws. All large volume inference jobs - so customer journey bots that help our company make money - run on dirt cheap models kept on short leashes in custom harnesses. Message delivery costs us 10x more than inference (with meta price hikes of October). All long-horizon jobs such as coding are probably somewhat inference constrained, but only to the point that sometimes the devs and corporate users with their own agents wait a bit for something to be completed, but nobody is noticing it. Sure, one notices a difference between /fast mode and normal while building software, but nobody really has a reason to care much, /fast modes are a pure luxury thing outside of incident remediation. I don't see what would Anthropic actually do if they had 10x the compute or 100x the compute they are planning for. Surely, some new business models, trolling mathematicians at a larger scale maybe?
Surely this is Nvidia deploying excess capital by acquiring equity in high growth companies at significant discounts (factor in that a major portion of the investment comes back to them against their high margin products). This isn't a new business concept and is generally accepted as smart business? Not some breaking news conspiracy?
From WSJ below. Seems clear they went too far. But not clear Kress can navigate this.
Over the course of the meeting, he proceeded to tear into the woman who is now taking over for him as Nvidia CEO.
Colette Kress was "a deer in the headlights," he said, interrupting her presentation, according to a person familiar with the comments.
He had summoned Kress and his senior finance team to diagnose a ballooning problem: Nvidia was in talks to provide billions of dollars of guarantees to companies that couldn't afford its chips. That included deals led by Huang's son-in-law, Nico Caprez, who had been offering upstart cloud providers and data-center developers financing in the hopes of turning them into long-term customers.
Huang had launched a dealmaking spree and was now starting to question whether it had gone too far, according to people familiar with the matter.
Kress was a "reporting CFO," not someone who could help him define a strategy or make decisions, Huang said during the August meeting.
You’ve now edited the comment I replied to (originally it was just the quote), but it is still not responsive to the OP; nor is your new comment responsive to my earlier criticism.
Well that's actually a hopeful sign for the future. I was a bit worried hearing she'd been conservative about investments in the past... but if the conservatism was about vaguely fraudulent circular financing deals we'll all be better off.
> (factor in that a major portion of the investment comes back to them against their high margin products)
One problem is that there isn't one number that indicates what percentage of Nvidia's equity investments come back to it in the form of chip purchases. In some cases, it appears it's 100%; in others, it has been suggested that every $1 invested produces >$3 in revenue. $1 invested for $1 in revenue versus $1 invested for $3 in revenue are really different outcomes.
There are also the questions of the revenue and revenue quality of the companies Nvidia has invested in, how much debt they've taken on, what sort of backstops/guarantees Nvidia has given them, etc.
> One problem is that there isn't one number that indicates what percentage of Nvidia's equity investments come back to it in the form of chip purchases.
And why couldn't a single number be calculated for this? They know their portfolio companies, their investment amounts, and the portfolio company purchases of their products.
> There are also the questions of the revenue and revenue quality of the companies Nvidia has invested in, how much debt they've taken on, what sort of backstops/guarantees Nvidia has given them, etc.
These are generally good things to look at for all corporate investments.
The main takeaway is that Nvidia investing in their own customers isn't inherently a bad thing. Investing in a poorly performing company is a bad thing.
> And why couldn't a single number be calculated for this? They know their portfolio companies, their investment amounts, and the portfolio company purchases of their products.
They probably could calculate it but they're not required to and, if we're being honest, they probably don't have an incentive to.
> These are generally good things to look at for all corporate investments.
They are, but the issue with Nvidia is that the web of customer relationships, equity investments, financing, backstops, etc. is very hard to untangle. Not every counterparty is publicly-traded, and even when they are, not every aspect of their business that would go into this sort of due diligence is necessarily required to be reported.
> The main takeaway is that Nvidia investing in their own customers isn't inherently a bad thing. Investing in a poorly performing company is a bad thing.
The question is whether or not Nvidia is even capable of adequately performing due diligence on all the customers it has invested in, financed or backstopped, or modeled the macro effects of its investments.
Because not every deal reported seems to have that math.
Some of the deals look really good on paper, and others look like $1 in equity investment produces $1 in revenue.
You also need to factor in whatever non-equity financing Nvidia extends to these buyers, how much debt they've raised from lenders and what backstops Nvidia has committed to.
Investing a bunch of money in a company that is heavily indebted, and committing yourself to buying significant amounts of any unsold compute might not be so smart, especially if that company has only one or two big customers.
So this is the real problem with Nvidia: it has all these deals, some of which might be totally sensible and others that might be WTF, and it's really hard for investors to figure out what the "portfolio" looks like overall.
They have been reinvesting all their inflated profits into more of these deals, at increasingly uneconomic valuations. That already makes it Ponzi-like.
It doesn't make recurring revenue, either. Not without fresh cash infusions into all the startups.
Largely means P/E is a useless metric here, investors don't get to see their short term net profits, and even if they do see it, those don't extrapolate to future years/decades.
We've got a lot of investors out there not thinking about this with a level head, they just see %%% growth and a "low" P/E.
BigAI has also been artificially boosting demand for and perception of acceptance by paying for lots of shills in socmedia. astroturfing. I can even think of 3 multi-$MM rewards made in the space to pro-AI boosters (OpenClaw guy, Bun guy, Omarchy/DHH). arguably a 4th if count Linus too, via the Linux Foundation sponsorship
Well how else could OpenAI who is basically synonymous with AI to laymen have spent nearly $6B in 2025 on marketing? 7 out of 10 YT videos I watch are also sponsored by some random AI company, which to me is just insane: how does every AI startup have unlimited funds?
If true then I think it is time to put all responsible folks at NVIDIA
in jail. This is collusion to the maximum, if it can be proven in court.
I don't think they should be able to just pay a fine - there has to be
mandatory jail time for people who build a cartel. Even in the USA a
cartel should be forbidden - capitalism as the main religion in the
USA, mandates that free market competition leads to lower prices. This
clearly can not work if big corporations decide to milk the market. These
things have increased insanely when the orange king and his cronies seized power.
This is delusional. The startups needed GPUs and nvda had the ones for AI. How is it even engineered they weren't forcing them to buy peanuts they didn't need but something they needed.
Is this “engineering scarcity” or just seeding demand for their product, which is something every company does?
As another example, when you apply to YC you can get some free AWS credits. Then if your startup is successful you’ll probably be deep into the AWS ecosystem.
If certain ec2 instance types are rare as they have been lately, is that AWS “engineering scarcity”? Or just finding new customers?
Guys, I have to say: I feel like I've found today's two-minute hate thread.
Has Nvidia done sketchy shit in the past (and very recent past)? Zero argument.
But as I follow this thread, I am seeing more and more pile-on that blames Nvidia for an increasingly staggering series of things that is starting to get out there.
I wonder if I’m noticing the odd timing of everything too much, or whether there’s an effort to air as much of Nvidia’s dirty laundry as possible.
No idea to what end, Nvidia stock collapsing would probably be enough to bring on the AI crash with no hope of gradual rebalancing (like the drop we saw a week ago) and most likely take the US economy with it.
It’s not like anyone will get cheap RAM suddenly if that happens, more like lots of people will lose their livelihoods.
When any trend, business, candidate, politician, etc. starts slipping, there is a tendency to pile on quickly. Not just “kicking when down”, but to unload so much other baggage quickly so it becomes just an undifferentiated “painful period” with no one (well perhaps one Judas goat, or actually Judas here) to blame, or to be held accountable for any individual business action. “Wow, that was a crazy time, we were all so silly. Let’s move on quickly.”
A product I work on had a big and quite public bug bounty payout recently. That led to an upswing in bug bounties reports. That's not odd timing, that's independent (human) agents sensing something as being valuable of their time poking at it.
I dunno, Nvidia's dirty laundry (dude's inability to keep his whatsit in his pants) seems like exactly the kind of thing that is inevitable to come out (oh god, that pun wasn't intentional).
No need for conspiracy here, personal weakness does in so many high flyers.
But I agree that the tech cat is out of the tech bag, and there's no going back: Nvidia doesn't make their own chips, they are almost fully reliant on other foundries.
Demand shows zero sign of softening - not since crypto, and AI just keeps it going.
Today, 5 of the busiest airports in US were ground to a halt for 5 hours. Why? the air traffic control system failed. Why did it fail? It is a system running 50 year old software. Why hasn't it been modernized? Because it is extremely expensive and risky to tinker with such a complex system.
I have no doubt that before the end of this decade, Claude could re-write the air traffic controller software, formally verify it, test it exhaustively, deploy it, and monitor it in operation. It might be able to do it now.
This is not a bubble. Very soon, it will be criminal negligence to run critical infrastructure on insecure, decades old software. Anthropics, or others like them, will be central to the functioning of the computer systems on which modern life relies.
So far the companies that did it had massive AI induced failures (Amazon just this year).
AI is absolutely a multiplier but people too eagerly try to dismiss existing good practices with "just let AI vibe code it for a week, surely it will be great"
And yet if you work deep with Opus5.5, it makes many mistakes all of the time. Of course, so do interns. The issue here is that peer reviewing by another instance of Opus5.5, is like having an identical human look at your own code. It's just not a true, real, peer review.
Now there are loads of fixes for that. But human peer review takes the super-fast out of using AI. You can review faster than write and test, that's for sure, but the best peer reviewing comes from people actually working in the code base, writing real code with their teammates.
Peer reviews by people not working on the code base, are far, far less viable. You'll catch big mistakes, but not mistakes predicated upon a code base you never ever touch or read in depth.
So you're left with lots of fixes we can suggest. I often use another model, eg, fable reviews once in a while on opus work, or I might use chatgpt for an alternative look. But here's the skinny...
Lots of devs do nothing of the sort.
And all current AI does seem to have similar blind spots.
I'm confident opus5.5 could easily re-write the entire codebase. Really, consider its age it cannot be that big of an existing code base. However, are there any devs alive working on that code base?
And do those devs work actively, or instead do they have fears about changing each and every byte? Do those devs understand the difference between 'that was a dumb way to write that' and 'oh, that's actually an oddity so that planes won't smash into each other in the sky'.
So:
* true human review isn't possible unless humans are working actively, and know the codebase
* few do any code review, even different model code review
* no one likely knows why design decisions were made in the software, so the biggest challenge is why was everything done precisely the way it was, which means the current biggest challenge is a series of ramp ups where the coders need to very much know ever aspect of traffic control in depth, then look at the codebase...
Because opus5.5 is good, but context windows aren't going to hold that.
I stand by this firmly, AI=awesome, no devs working alongside to have skill to review=insane.
Apple was never really at the party giving OpenAI zero and giving Google a $1 billion refund on the default search engine position fee means that you’re not exactly at the party. But Apple did pay more for memory to put into your devices. But in the case of Apple, the end users paid for it.
The companies that don’t have billions of dollars but put billions of dollars into those data centers and paid the price in debt will be the ones that will be in trouble, particularly if they did nearly everything on credit, some of the companies spent a huge amount on CapEx. If the bubble were to burst now look out below.
Reading this thread makes me realize that seemingly no one has heard the basic, mundane case for why Nvidia would want to do so much "circular financing" as a matter of totally normal business strategy. This may not be the whole story, but it's worth understanding.
Because of bottlenecks in the supply chain, Nvidia knows it is going to sell 100% of its inventory. They could raise prices quite a bit more, but then their only customers would be hyperscalers (building competing chips) and possibly OpenAI and Anthropic. Nvidia is willing to forgo present day profits for the strategic value of keeping its customer base diverse and promoting the network effects of e.g. CUDA. Instead of quoting a lower price per GPU to neoclouds and startups, they finance purchases of chips, but the two are roughly equivalent (financing means Nvidia takes on more risk, but has more upside and locks in future demand). It is in their commercial interest to have many competing buyers of their chips.
Obviously this creates fun mechanisms for fraud and wacky accounting (and I'm agnostic as to whether that's happening here), but it's worth knowing about the boring/obvious story before donning your tinfoil hat.
>In Berlin during a conference, Huang, accompanied by his top sales executives, broadcast a new message to a half-dozen CEOs of companies that are major buyers of Nvidia chips who were seated around a circular table. He opened with a story that sounded like a fable, according to people who attended. Huang had once found a soup vendor in Japan, he said, with a long line of customers. He joined the line, and after a long wait, enjoyed one of the best bowls of soup he’d ever had. When he asked for another serving, the soup-seller told him no—he had too many customers waiting and not enough soup for all of them.
“He’s a better businessperson than all of you,” Huang told the cloud computing CEOs. The soup-man doesn’t sell out all his inventory to one or two customers, but instead keeps prices high and his customer base diverse, the CEO said.
“You are not establishing the value of my products,” he said.
When you go into a Ford dealership there is a good chance that you will buy your truck with a loan from Ford credit. That probably helps keep the price of Ford trucks high and Ford makes a lot from loans. And there are problems today with vehicles being repossessed too much because of the long loan terms.
‘Circular financing’ sounds sinister but customer financing and vertical investments aren’t strange or uncommon. It could be bad for sure. But it is not like they invented a new form of wickedness.
Ford is lending money to people with jobs and credit history--startups don't have the business equivalent of either. One can also argue that while the collateral (cars) does depreciate, they'd don't depreciate as quickly as GPUs.
Its not that circular financing is sinister or illegal, its that its very risky. If the startups that are purchasing the product are also getting a loan from the company making the product and that loan is also backed by that same company then if that startup is unprofitable and has massive debt at interest rates like 15% or has near junk bond ratings then the company that built, financed and backed the products is on the hook for it all.
Sure they have customers pounding at their door for more product. At some point the hype machine stops and new neocloud startups can't get funding because its too expensive or banks don't trust them. Then what happens? The circular financing starts to unwind itself and NVidia is the "bag holder". If you look up Lucent or Nortel this happened to them during the dot com boom. There is a positive difference here with NVidia, they have so much demand and usage this can probably go on for a while. Lucent and Nortel were bit by dark fiber and the usage/demand just wasn't there.
If Jensen at the helm of NVidia is bullying/convincing companies into purchasing more than they need, financing it, etc. and creating the hype machine himself and NewCEO ain't going to play that game, then it could be an end to the circular financing.
It's not uncommon for dealer financing to be a loss leader. I've never used dealer financing that wasn't below 2% APR
>dealer financing to be a loss leader.
"dealer financing" is an umbrella term for the dealer's finance office acting as a "loan broker" and shopping around the customer's credit profile to find any bank willing to lend the money. (When the customer fills out the credit application at the dealership, the dealer then submits the info simultaneously to a list of potential banks.) The eventual underwriter for the loan may be the auto manufacturer's finance arm (e.g. General Motors Financial subsidiary or Toyota Motor Credit, etc) ... or ... it may be a non-automaker bank such as Chase or Capital One. Whichever one the customer ends up with depends on the particular credit score.
None of those financial entities are making car loans as a "loss leader". It's the reverse situation where both the dealer and the underwriting bank make money and the interest rates are high enough such that the banks pay kickback commissions to the dealer for funneling the loan to them.
> I've never used dealer financing that wasn't below 2% APR
Interest rates (such as "0% APR") that are artificially lower than prevailing market rates means the missing extra interest is embedded in the sales amount in the form of a higher price. TNSTAAFL.
Working with a (comparatively small fry) customer who has a $5M grant to buy HGX B300s, current lead time is 37 weeks. This is for a chip which has already been superseded by the R100. NVIDIA has customers lined up around the block, including smaller shops that don't get special treatment.
I don't deal with their big customers, but the idea that NVIDIA doesn't have customers ready to spend $$$$ to get some GPU in their datacenter is proveably false. It's likely easier for them to handle big transactions for big customers, but there's also a loooong tail of customers in line for a smaller piece of the pie.
37 weeks is an entirely normal lead time in the semiconductors world. There are many sub-$10 components with similar lead time.
LLM models are proving math theorems no humans could in ways no humans could. These GPUs can literally run that intelligence level and as humans we have an endless set of problems we need to work on.
Many people are deploying and using this new technology for very productive ways. That’s why Anthropic revenue is so impressive.
There is a very large cohort of reasonably well educated and articulate humans who are having problems processing this situation in some deep way that has them in denial and constantly insisting there is a massive bubble or something fraudulent or broken, of course there probably will be to a certain extent, some overshooting. and they will claim “see we were right” but even if that happens there is incredible rapid progress that is real, tangible, backed by real money and spending, and real productivity.
Anyway, going back to my desk now and steering LLMs on a code base created in 36 hours that is equivalent to 10-20 man years of work just 4 years ago, but sure “it’s all a bubble”, and like you said tell that to everyone in-line around the block who knows what’s really happening and wants more of this hardware which can do this.
I am concerned about the long term impacts on the economy when more and more people lose their jobs from Ai and automation. What happens when the middle class disappears completely and no one has money to buy anything? Who are all these companies spending all this money on Ai compute going to sell to? Demand dries up, then demand for Ai dries up, and then pop.
Also, how do we know at what point we'll have too many gpus online from all of these datacenter build outs? They are just assuming demand will continue to grow but what happens when supply becomes higher demand?
And at what point is a model good enough for most work? If someone releases an opus 5.5 level model as open source, does the whole equation flip and does everyone go to just running a local model?
Why wouldn’t the middle class have any money to buy anything?
World War? Investments wiped out by speculative financing on data centers and inference deals? Global financial restructuring?
They lose their ok paying jobs and are forced into minimum wage jobs because Ai automated away their job. There is already massive inflation and regular people are struggling. This is why some people spout on about minimum basic income but the reality is that our politicians are too captured by business and special interests to implement the needed taxation to implement a program like that.
Yes, AI and LLMs are useful tech.
Yes, there is massive fraud and circular financing happening around it, and the above is just one of three ways it’s happening.
Interesting that the main thing you can say about your codebase is that it took exactly 36 hours. Not a few days, like most people would say (because they would be focused on the product and not the exact hours). And nothing about what is does or whether there is even one customer that is using it.
Right! The bear case should be that in the long run, matmul gets commoditized and nobody will pay a premium for Nvidia.
To argue that demand for their chips & systems now is fraudulent is coo coo Cocoa Puffs.
Recently, I encountered a vendor with a near monopoly. I learned that they’re priced reasonably for new market entrants out of fear of monopsony.
monopsony - a market structure in which a single buyer substantially controls the market as the major purchaser of goods and services offered by many would-be sellers
Could we also include national security? The people of the US really want to avoid losing to our competition because they are forced to develop their own cutting edge chips. We need the world on our petrodollar and the world’s best AI researchers on our chips. Jackson Polloc is famous largely because the American government created false demand by driving his auction prices up for national security reasons. Lutnick has even been honest, about that. In this case, NVDA and US have aligned interests in NVDA’s dominance, and it seems like being given more leeway to engage in creative if not entirely kosher business practices might be part of a coordinated plan with the current administration.
> the strategic value of keeping its customer base diverse
That's one way to say, "maintain a monopoly where everyone needs you and you depend on no one."
Well funded hyperscalers are trying to reduce dependence on Nvidia. And Nvidia is conversely trying to push into cloud with these credit backstop/revenue sharing deals.
It does make them even more leveraged to the bubble though. If a neo cloud collapses, they're lose customers and gain debt collectors. It's a sound business strategy until it isn't. It's not good risk management, but then you don't become the world's largest company by making safe bets.
Nvidia isn’t taking on any material debt to finance all these deals. They have the cash on hand to cover pretty much a complete collapse of every neocloud they’re currently backstopping.
So yeah if it goes tits up, they loose customers, but they’re customers that wouldn’t exist otherwise, and they can easily pay to make the debt collectors go away. But if it’s anything except a complete collapse, then they’ve grown the customer base for their products long term, and hedged against hyper scalers replacing them with custom silicon.
At the moment it looks like the downside risk is limited, and in the worse case, tolerable, whereas the upside is unbounded. Those are really good bets to be placing, the only trade-off is opportunity cost. But even there, what other opportunities could Nvidia be deploying their cash into, beyond share buybacks?
> It's not good risk management
Making a large number of very risky bets on small startups is how venture capital works. Most will fail, hopefully a few will make up for that.
Also, it's basically putting your profit into an investment (the loan that will have to be paid back) while keeping the inventory going and prices rising
Hmmmm, New Allegations, very likely Sherman Antitrust Laws which involves Price Fixing & Collusion
The Sherman Antitrust Act (Section 1). Did Nvidia allegedly engineered scarcity by funding AI startups to buy its GPUs ?
Uh
> Nvidia knows it is going to sell 100% of its inventory
Isn’t the entire problem here that they don’t know, and they haven’t?
It's obviously impossible to tell without more insight, but the large AI labs are very much out compute and could use more of it, or they wouldn't be renting DCs from their competitors.
The neoclouds ensure there will be consistent demand of Nvidia GPUs even after everyone big moves to their own custom ASICs
Out of compute or out of chips? I swear I heard somebody saying Amazon had a whole datacenter worth of GPUs not even pluugged in sitting in storage because they were pressured into to purchasing them early by Nvidia and datacenter contruction was significantly delayed.
But that also just shows that the demand for nVidia’s products exceeds supply. The reason that nVidia was able to pressure people with take-it-or-leave-it deals (if that’s what did happen) is precisely because everyone involved expected (and correctly, so far, as it turns out) that there would be plenty of other customers ready to take all the places in the queue.
Running out of compute isn’t the same as “can buy more GPUs and use them”, else AWS and MSFT wouldn’t have billions of dollars of GPUs in warehouses that they have no datacenters in which to rack them.
GPU supply isn’t the constraint; datacenter space is. And that means Nvidia might not normally be able to sell all that they’d like even with seeming high demand.
For AI data center chips, they pretty much are constrained by how much they can produce (TSMC is fully booked and RAM is scarce / expensive).
They are constrained by the chips they can power, at least in US
How can we even talk about this without talking about price?
I have customers begging, pleading for more GPUs. There is still strong demand.
Yeah now that they have engineered artificial scarcity.
I mean, the wind can start blowing the other direction. And they can go overboard on the deals. But in the past few years, yes Nvidia has predictably sold out.
Does that 100% include the gear that gets stolen in transit?
'Stolen', meaning 'delivered to wrong address'?
You should call this belief "Effective Altruism: Founders Edition"
What you're describing is the belief that they'll always sell their GPUs for a profit, so it doesn't matter what rules of accounting they violate _today_ because they'll be effectively more valuable _tomorrow_.
The same way an effective Altruist will poison a town's water supply if it grants them billions of dollars in the future and allows them to buy the town bottled water at some interdeterminate point in the future.
It boils down to the belief over reality, and feelings over facts; essentially, you're saying "as long as their intentions were good (gpus for everyone), it doesn't matter how much they hurt everyone"
No one is saying they broke a rule of accounting. Or, I haven’t seen anyone say how they violated GAAP rules. I think EA is dumb to but I don’t think that is the issue here.
This is third source reporting. WSJ does the original, Wccftech reports that WSJ reports, now Techpowerup reports what Wccftech reports about WSJ reporting.
ORGINAL is the best. It tells completely different story better (not a weird twist where CEO trying to increase sales and price of their product is suspect)
Before His Ouster, Jensen Huang Belittled the Executive Replacing Him --- Interim CEO Colette Kress has questioned some Huang dealmaking. He called her ‘a deer in the headlights.’https://wallhop.io/https://www.wsj.com/tech/jensen-huang-col...?
https://wallhop.io/https://www.wsj.com/tech/jensen-huang-col...?
Stuff I did not know:
(circular financing)
>Huang had launched a dealmaking spree and was now starting to question whether it had gone too far, according to people familiar with the matter.
(neopotism, Huang’s son-in-law, Nico Caprez)
>Huang’s son-in-law Caprez and another vice president Raj Mirpuri told prospective business partners that Nvidia could arrange credit-support deals within a couple of weeks. Dozens of companies lined up for this program, hoping Nvidia’s backing would lower their borrowing costs. In exchange for providing credit support, Nvidia proposed that cloud providers share a cut of their revenue.
>Behind the scenes, she [Kress] tried to rein in Huang’s son-in-law, who had been promoted to a vice president in January, people who worked with her said.
(...)
>By October, Nvidia started to turn off the tap.
> [Story about Japanese Soup vendor] The soup-man doesn’t sell out all his inventory to one or two customers, but instead keeps prices high and his customer base diverse, the CEO said.
People have been mentioning about how all of ai is a circular financing scheme for months. Anthropic, openai, meta, etc. they all have been meeting with one another and making really insane deals. I am curious what the details are specifically, but I am shocked to find that anyone let this go on this long and only now decided to act.
It would be historically entertaining if all the ai hype crowd found out they have been hyping a ccp scheme to crash the us economy to the point where even the military was cheering it on. But the truth is, this is just how business works now that billionaires and trillionaires can do what they want.
I want what's best for the US but acting this slowly puts any meaningful repercussions for this behavior into the realm of theatrics rather then lessons learned. Oh well I guess some people got really wealthy so we should all be cheering while the price of food and everything else is insane.
Why CCP? That Nvidia has been irking Wall Street bankers by acting like a bank has been public knowledge for quite a while. What Nvidia did is instead of selling their GPUs for $10, they sold them for $100, with very favorable terms over a long time, creating lots of (cheap) debt for others, who were mainly datacenter companies, who could then pay off the loans and rent out the GPUs at razor thin margins.
This scheme had pissed off bankers that a company muscled in on their turf, created lots of debt in a time when US debt was already sky high and becoming unpopular, relied on GPU depreciation being low (implying tech progress was slow, which didn't gel with the singularity crowd), and getting crazy rich in the process.
I don't even know how China factors into this other than competing with the US
> This scheme had pissed off bankers that a company muscled in on their turf
Weird if true, because businesses having a side-line in financing their customers is extremely common. Most large retailers, car dealers etc all do it. Sometimes they outsource to a third party, but sometimes they do it all in house. In a few cases they end up making more money as a finance company than the business they started in.
I remember hearing about a large US company that had a financing arm that was way bigger than the primary business they were known for.
GE Capital during the 2008 financial crisis?
That's the one I was think of.
Might have been IBM at some points in the past, unsure these days.
Yeah, but at this scale, it's mostly banks and private equity and other finance companies, right? Like, taking on enormous data center type debt? And especially on the bank side, we are highly regulated. These sorts of deals between the AI companies are red flags to us.
I've seen it be done with consumers and small B2B but not big giant business finance like this before. I could see how it could irk banks. I mostly work as a programmer in finance and I will say the mood has not been nearly as...idk...jubilant about the whole AI situation as it seems to be amongst friends in the startup scene.
It's mostly not helped our productivity and projects to implement (except for the very small local models that can run on mainframes and the like) have mostly failed, so I could see how bankers and others working in finance might be MORE willing to believ that there was a bunch of conspiratorial stuff going on than the average Hacker News patron who can get away with letting it rip with Claude on the job.
I won't disclose what company I'm at, but it seems the general opinion amongst big bankers and programmers for big banks is that we are in a bubble and that we don't intend to be the ones that get in trouble for it this time and have stayed pretty clean.
It's easy man, just get out there and educate the masses so they can see things your way.
Who decided to act? Some dirt that everyone thought was swept under the rug leaked, and now everyone can see how much of a dirt bag Jensen is. It's looking to me like the house that Jensen built is just a bit less raggedy than a house of cards built on sand on top of an active fault line. The news of these deals isn't a recent revelation. The recent news is that there's possible skirting of laws by the company led by a philanderer at best with one of his trysts being with a foreign spy. There is no good light to paint this.
Such an important company, with no succession plan. He had 60 direct reports.
> I am curious what the details are specifically
So are most of the shareholders: most of this crap is off of the balance sheet until (if) it comes online!
In the first nine months of 2026, Microsoft, Amazon, Alphabet, Meta, and Oracle spent $556.9 billion on capital expenditures against $542.9 billion in operating cash flow, leaving their combined quarterly at -$33 billion.
Off-balance-sheet AI obligations across MSFT, AMZN, GOOGL, META, and ORCL are roughly $3.2 trillion (nearly six times capex).
Oracle is doing cute stuff like locking itself into 15 to 19 year facility leases while only signing customer contracts lasting up to five years. Some sites, they can’t even finish building.
>Stuff I did not know:
>(circular financing)
How? This was common knowledge many months ago. Oh, right. Filter bubble. Like this video, which explains the insanity. 3 updoots.
https://news.ycombinator.com/item?id=47306898
I guess if you only read a silicon valley cheerleading site like this one, you may be blindsided by the facts.
Major cloud providers were running away from Nvidia, making plans to use alternative chips and lessen their reliance on the firm. Even worse, Huang said, the vast supply of chip wafers and memory Nvidia had committed to buying were coming at him like an “avalanche.” https://archive.is/20261113091227/https://www.wsj.com/tech/j...
Wallhop doesn't work for WSJ anymore, here is the alternative: https://archive.is/20261113091227/https://www.wsj.com/tech/j...
I was able to read the whole article from the wallhop link.
Honestly, terrible reporting all around this issue, especially by NYT and WSJ. Then all the other news sources repeated the same lies.
- Singapore govt issued a statement clarifying that WSJ fabricated facts. [1]
- It's been clarified now by the President's Council of Advisors on Science and Technology that there is no convincing evidence that Alice Huang is a spy. [2]
- The statement that Jensen called the new interim CEO ‘a deer in the headlights’ actually hurts NVDA stock, as it lowers the confidence of investors in her and I'm sure WSJ knew that before posting this speculative article with no cited source.
This looks like a hit job on Jensen and Nvidia. NYT and WSJ have spewed false facts with no credible sources (just "anonymous" sources) to discredit Jensen as much as possible and hurt NVDA stock. Jensen probably cheated on his wife, but mere cheating is not grounds to remove a very competent leader from the company he created.
[1] https://www.mha.gov.sg/media-room/newsroom/clarification-sta...
[2] https://x.com/DavidSacks/status/2121070881258504395
> It's been clarified now by the President's Council of Advisors on Science and Technology that there is no convincing evidence that Alice Huang is a spy. [2]
Anyone appointed by the current Trump administration can't be considered a reliable source. Neither can anyone else with a vested interest in the GPU/AI/datacenter market.
Maybe the spy accusations are bullshit but nobody should take Trump's cronies' word for it.
Good reminder. It wouldn't surprise me if she was or wasn't. They decided now was the time to torch jensen, shortly after POTUS met with xi xingping. They knew he was seeing Alice for months.
The moves jensen made by selling gpus to China illegally in a sense kept thaiwan safer from invasion. Now all this China spy news is going down and in the same week China says it's taking thaiwan again. China does always say that, but maybe this is their way of saying "we aren't getting what we want anymore". Lots of stolen GPU shipments in the last month too. Hard to say.
Sacks cites other officials, including a Democrat who says that he has not seen any convincing evidence.
Jensen is an advocate for open source models and wants the whole humanity to benefit from AI, not just the US. Maybe that's what took him down. Anyway, it's clearly a coordinated hit job.
> it's clearly a coordinated hit job.
I am beginning to think the hamhanded manner of this takedown is itself signal to politically vulnerable players. When the public sphere of society has become so vulgar and crass (starting from the top potus) we can only wonder at the level of vitriol and jungle means that happens behind the scenes in semi private.
Jensen Huang is being crucified merely by newspaper articles and innuendos. And the level of social misbahavior by this poor schmuck who happned to land in the society circle of world class SHARKS is so pathetic compared with Epstein norms of these same elite (media, academia, industry, financy, tech, government, all Epstein friends) that it is stupid of us in general public to go along with this.
What a good excuse to believe some publications with no sources cited versus actual officials (US officials and Singaporean officials). A clown costume would be fitting.
Anyway, the Dems have the exact same position as the Republicans, that there is no convincing evidence: "Rep. Jim Himes (D-Conn.), the likely incoming chair of the House Intelligence Committee, is unsure whether a business executive who cultivated close ties with Nvidia chief executive Jensen Huang is a Chinese spy, based on information he received from U.S. intelligence officials in a classified briefing earlier this week." [1]
The accusations made by WSJ, NYT and Economist have proven baseless so far, hence my point that this is a hit job.
[1] https://www.yahoo.com/news/politics/articles/top-intel-dem-u...
I don't believe anything concrete, as far as I'm concerned they're serious but unproven allegations.
> Anyway, the Dems have the exact same position as the Republicans
No, he said that he's unsure at this point, given the evidence available.
And for what it's worth, I wouldn't believe the dems much more than I believe the republicans. Both sides have deep ties to the industry and there's far too much money at stake.
Ok, so you just love a conspiracy theory and don't care about any facts.
Why would anyone believe anything David Sacks says?
Yea no one should take anything Sacks says as reliable.
He’s an administration shill and is a constant source of disinformation, especially on things like Russia and ukraine
He's an official and he cites other officials, including a Democrat official. Singaporean officials have also debunked the false statements of WSJ.
If you prefer to be a clown, you can keep believing the publications with no sources cited.
Or the current admin, which could very well be involved.
Circular reporting about circular financing
> ORGINAL is the best.
Then purchase a subscription and don't use paywall bypass links for articles. Or you won't have any articles longer.
or change your expectations on what authoritative journalism is, where it can be from.
Those people need to be paid, too, but the options are way more flexible and accessible.
I thought we knew a year ago that nVidia was doing circular finance?
https://www.theguardian.com/technology/2025/dec/28/nvidia-in...
Most bubbles you see coming from a mile away. You just don't know how many miles away the actual pop is.
It is also so lucrative to participate in a bubble that if you focus too much on the problems you will miss out.
I think part of a bubble is knowing the problems but participating anyway. Over time then the problems start to feel normal and while things are good you rationalize why maybe the problems aren't such a big deal after all.
Yep. Slowly and all at once.
Especially if you ignore or avoid the evidence in front of your eyes.
When a bubble pops, the pop typically takes years to happen. It's more of a slow deflation in most cases. Afterwards, you can easily spot the peak that would never be reached again but, during a "pop", it's not clear if you're past that peak or if you're just experiencing a momentary blip on the path to new highs.
Nvidia is likely not going to surge back to $240 soon. It might go lower actually. Skeletons are still falling out of closets. Huang may have been the tech founder's tech founder, but he kept some pretty nasty company in recent years and, as we're now finding out, got both himself and his company into shady territory. As it turns out, ethics are not just for aesthetics.
Is Nvidia slowing down for a year or two bad for AI as a technology? Probably not. Nvidia could find a leader that will return them to top form, or another company could take advantage of the situation to catch up and surge past. A lot of AI researchers have been calling for a pause or, at the very least, a slow-down. This might be just what was needed.
However, given Nvidia's utterly unique position as both hardware supplier and bank for the data centre build-out, what will the impact be on the rest of the AI sector? The market is going to have to price in a weaker and slower build-out as well as a loss of trust in Nvidia. That's clear downwards pressure. Is it a blip, or are we now past the peak?
It’s not the only indication that we are past the peak, I think. OpenAI’s failure to raise what they wanted, Anthropic’s likely junk rating, banks struggling to offload AI debt at fairly deep discounts, Oracle’s obvious problems, the strength of open weights and open source, a loss of confidence in Coreweave etc.
As you say, if Nvidia is chastened enough to slow its banking endeavours and that lets air out of the bubble in a progressive rather than dramatic way, that’s probably better for everyone (except OpenAI, who are probably hosed in that scenario, as they have huge commitments but are struggling to raise what they need; Anthropic might last long enough to reassess)
I'll admit it, I am not very well educated in the ways of finance but I am a bit baffled how Anthropic can be valued at (reportedly) upwards of 1 trillion but also have a "junk" rating?
I’m also not an expert, at all.
Junk rating from a relatively high likelihood that they can’t pay the people they owe money to. If you buy their shares they are much more likely to go to zero than a more stable company in the near term. So you don’t want to buy anything Anthropic with money that you may need for anything.
High valuation because the public believe that if they do figure it out they could be worth hundreds of trillions. So a lot of people may want to buy it as a speculative bet of ungodly returns
Junk is just a terrible name in 2026.
Previous bubble villain Michael Milken and the 80s leveraged buyout bubble made it a name of common parlance because that bubble was built on "junk" bonds.
The old traders of that time who were against what Milken was doing called them "junk" and the name has stuck ever since.
It just means "risky". If you trade bonds it has no association with "bad". It is an inside bond market term, I think that is why it sticks too. It is a fun term if you trade bonds but terrible for communicating to the average person.
No, junk means something specific here, it's not just a vague term.
If you think it's terrible for communicating to the average person (and I am very much the average person) you could explain it yourself in detail.
So I will try, and I will accept constructive criticism:
You are right to imply that it is a sort of consensus rating threshold maintained by the ratings agencies that means their (Anthropic's) debts are not considered investment-grade — that they are speculative, high risk, that they are considered likely not to be able to repay. It is ultimately the ratings' companies (and therefore some individual people's) decisions as to whether they are above or below this threshold.
But for Anthropic it has concrete impacts, doesn't it? It means they will pay much more for their debt, they may not be able to negotiate long repayment terms, they may need to pay higher underwriters fees, they may be limited by the terms of any individual loan (how much future debt they are allowed to take on, whether they need that lender's approval to restructure their business in even small ways), and most importantly, some institutional investors (pension funds, mutuals, insurance companies, ETFs etc.) will be barred from investing (which drives why their debt will cost more).
Frankly I think it is baffling that Anthropic are still headed to an IPO when this is what it could look like on the other side.
'junk rating' always means bonds, and it's the share price/market cap that's that high.
Very loosely a 'high' (price over earnings) share price is about growth and exciting prospects; high or well rated bond is about stability. (Not to suggest they move linearly in opposite directions though!)
A lot of people want to buy their stock because of their fame, but the company’s underlying financials are junk (way too many commitments, way too little revenue)
The problem is they don’t have a unique enough product to sell at so high margin. If they were the only AI good enough to use, then I’d be ok. But given that cheap Deepseek is always catching up their stock is useless
They are different things, the valuation applies to their equity value (reported) but the junk rating is for its debt and how creditors asses the quality of the debt. If a company is burning tens of billions of dollars and is only "operationally" profitable, you would kind of have some doubts about their ability to repay. Those doubts can stand at odds with how the equity market sees the long-term potential of the company.
Bond ratings are (supposed to be; see 2008 for failure case) based on actual, hard financial metrics. Stock valuations are that, plus fortune telling, plus feels, plus Jim Cramer hitting a big red button.
Would it not be extremely foolhardy for a new CEO to start slow rolling things considering the dominant position Nvidia currently finds itself in? Why would they do that? You say yourself it would clearly be a managed decline in that case. Why would an incoming CEO want that? Don't forget their pay would likely be performance related and probably not tied to decreasing the stock price
I’m pretty naive about this kind of thing, so bear with me, but if your stock is in free fall and you need a new CEO, isn’t there merit in a stabilizing force? No one is ever compensated just for, at least in the near term, stopping the bleeding?
Well the stock is high because shareholders have been predicting massive future growth. If a CEO is going to stabilize the price, that means they have to give investors confidence in the same or at at least similar growth trajectory. Which was aggressive.
Imagine you're about to get on a rocket ship, betting that this famous maverick rocket pilot can take you to Mars in 2 days. He already made it to the moon in 12 hours, record time. And he invented the ship, too. Then the pilot gets caught having an affair with the stewardess, gets fired before the trip, and they bring in a normal airline pilot who's never been on this ship before, never even flown a rocket ship, and who starts talking about good old fashioned normal speeds, and making it to Mars in a few years' time or so. Or, you know what, maybe just orbiting the Earth a few times instead.
You might be tempted to pass on the trip, no? And you wouldn't be the only one. Suddenly this rocket trip which had lots of passengers is completely empty, with no one to fund the trip. This so-called stabilizing force has killed the trip.
Nice analogy but there’s just one problem: it assumes arriving at mars is the end goal. But that’s not how companies seem to operate. They’re about indefinite growth. Which clearly isn’t possible and ends up killing a lot of companies as they eat themselves from the inside just to keep greedy shareholders happy.
There used to be a time when people would invest over the course of decades and enjoy the dividends they received. But these days it’s all just about the short term rewards.
Tragedy of the stock market: infinity can hit a company even if both management and shareholders are fully committed to modest long term stability (apparently this is absolutely not what happened at nvidia).
A company can get into the sights of "infinity believers" even if they try not to. Infinityists will honestly believe that the stock is a very good buy and whenever a "stability lover" has to sell, they will outbid the next stabilityist. Price goes up, it becomes more visible to infinityists and so on. Eventually infinityist will outnumber stabilityist and management will enter "or die trying" mode on promises they never made. Or be replaced.
If they discover tricky shenanigans, they might well announce them publicly to cover their own personal position. At the start, they're not going to have too much invested.
Yes, you publicly announce everything now so you can throw it all at the feet of the ousted leader. If not, enough time will pass where blaming the ousted leader looks like excuses for the current one and just looks bad to the public. Look at the current US administration as an example of how the constant blaming of the previous administration played to the public opinion.
Right. One of the weird side effects of the Jensen Huang report hierarchy is that instead of a handful of direct reports that have stories they need to CYA on, there are over sixty of them! This could make the congressional testimony aspect pretty intense.
That’s a good point. A new CEO never wants a slow unwinding, they go for quick pain to set the baseline of their bonus assessment into something workable.
The peak on the semiconductor ETFs was in spring. Even with the bounce semiconductors are 30% down from the peak.
OpenAI not being able to IPO I think is the huge indicator that we are in denial of.
The tide is starting to go out and we are starting to see who is swimming naked.
Jensen and the Jensenverse as the villain of the bubble is the prestige of this bubble's magic trick. That is a show stopper.
OpenaAI as Myspace I think is the second act, yet to come.
> When a bubble pops, the pop typically takes years to happen. It's more of a slow deflation in most cases.
That’s just a bear market. Bubbles pop, otherwise we wouldn’t call them bubbles. If you call every downturn a bubble it ceases to be meaningful, and we’d have to come up with a better term for actual bubbles.
> but he kept some pretty nasty company in recent years
Sorry what is this in reference to?
Anyway, ethics has no place in business. If it did, profit would be zero.
You can make a profit while still being ethical. It isn't even hard to do so.
Sure you can, if you are your own one-man business. Otherwise it's exploitation—you're stealing from your workers. This is not remotely controversial. (or profit sharing etc, which is so rare as to mostly not exist)
But public perception has huge repercussions in business. If screwing Chinese models contributes to bad public perception, business will realign and oust CEOs who do.
> screwing Chinese models
It's funny how the problem of Chinese models ended up affecting Nvidia and the US AI industry in general. Just not in the way it was predicted.
Bu dum da tiss! - Underrated!
Only in a zero sum game, which capitalism fairly definitionally is not.
How do you figure? There are certainly places where we manage to create value, but this has little to do with capitalism and more to do with hauling shit out of the earth that we didn't have before.
Even if you know the timing of the collapse of a cataclysmic bubble what do you do?
All of the investable assets will collapse at the same time. Inflation will evaporate cash. Bonds will worth nothing (if the us gov bothers to repay them).
Shorting. Put options and futures.
You need to know with ridiculous precision, though. And the triggering event for the collapse usually isn’t predictable. For instance, if we’re seeing the beginning of the end now, we’ll, no-one could have really predicted the current sequence of events, unless they knew about Huang’s misconduct _and_ when it would be leaked.
That assumes the counterpart is liquid.
Fourth law of thermodynamics: liquidity will be provided by the central bank.
If you know the timing, CFDs it is.
Nobody can see a bubble. That's why it's called a bubble!
Then why am I having trouble getting the GPU capacity I need?
Most of the GPUs that have been sold haven't been plugged in because there isn't enough electricity in the world
There's plenty. Electricity (and energy) is absurdly cheap in the modern world. 1GJ is roughly 10$. An H100 running 24/7 takes 20GJ/year, so that's 200$, which is orders of magnitude less than its retail price.
If energy wasn't cheap, you wouldn't see people driving large vanity SUVs around in the least economic way possible.
It’s very much not true in all geographies.
It also requires major infrastructure to deliver that energy, which takes money and time to build, as do the datacenters.
"If cake weren't cheap, me and the other aristocrats wouldn't eat it daily"
Around 0.05-0.15% of the world population own such large SUVs.
Something something something pride before a fall something.
Can I get a source on that please? I think the talk of not having enough power for the AI rollout refers to future needs not current demand.
This is a preposterous statement to make.
replace world with US
there is plenty of electricity in china
Great! How steep a discount can I get to take them off the hands of people who can't plug them in?
Right? This fever dream that there are boxes upon boxes of unused cards (some even claiming on this thread that it is 50% of GPUs sold) is utterly delusional. Some people want AI to go away so badly that they temporarily lose the ability to reason.
You're giving them a lot of leniency with that phrasing. Personally I get the impression many never do think in the first place, just imitate it by regurgitating what they've heard from others.
I try and give a lot of leniency because generally these people aren't stupid or meaning to be unpleasant, they are just scared. Which means sympathy, kindness and understanding is the likely cure. You can't reason someone out of a position they didn't reason themselves into.
With the recent craziness, perhaps not all of it is as far from the truth as we might think? There could be quite a gap between units "sold" and units actually made...
Because most hyperscaler projects are stalling. The number of datacenter chips number was way higher in Zitron's report.
While your datacenter is not built, guess where the AI chips are? That's correct. In boxes.
> While your datacenter is not built, guess where the AI chips are? That's correct. In boxes.
Are you sure about that? Might just as well be in Excel sheets only...
There's plenty of electricity to run every GPU in the world, just maybe not enough electricity to run every GPU in the world and have poor people afford AC.
GPU scarcity is a really poor proxy for the health of the AI market. I don’t know if I should be surprised that someone so bullish about it doesn’t understand this.
you should not be surprised. paper millions already borrowed against at stake
Did you read the OP? Because Nvidia gave money to people who aren't you, so those people could give the money back to Nvidia for GPUs. In other words they gave away all of their GPUs in exchange for stakes in startups, because they were betting that VC hype and the perception of high demand generated from doing so would be worth more than selling GPUs normally.
Car companies do that all the time ever since banking licenses have been issued to non-financial institutions.
Nothing new, nobody pays a car cash anymore
I wonder if the economics of the two industries is similar enough to be useful here. Car demand itself seems fairly stable and repossession is a way of recovering value in cases of default. Credit scores of individuals purchasing cars being tied to salary/wages vs. startups without much history. I just wonder if the analogy isn't fraught with issues.
But presumably those gpus are being actually used by those companies? Even if their prices are artificially inflated? Or are these buyers sitting on piles of unused gpus to make demand look good?
> These GPUs are probably in use now,
A different question might be, will these companies grow over the new few years?
If I give you 10 Million GPU in exchange for 25% of the company and the company goes bust or has negative growth (and thus is forced to sell assets), effectively I just put 10M GPUs on the market with a huge discount.
At a grand enough scale, this undermines the GPU marker and one could argue that Nvidia has been doing this on a massive scale.
> Or are these buyers sitting on piles of unused gpus?
Yes, they are literally doing exactly that. Noting that they aren't truly "buyers" so much as "gift recipients" (in exchange for ownership stake, but the value of their remaining ownership also goes up if these gifts generate sufficient hype for investors to invest more). GPU production is outstripping datacenter capacity.
> But presumably those gpus are being actually used by those companies?
But, even if they were all being used, this wouldn't mean much. The central point is: suppose Nvidia has produced 10 million[1] datacenter-class GPUs during the LLM bubble. Nobody can afford to, or is willing to, buy 10 million datacenter-class GPUs at their list price because the economics don't work out. But if they gift 10 million GPUs for stock, and frame it like they sold the GPUs (a framing that is effective -- although this has been an open secret, this is being reported like news by the WSJ, and to the majority of their readers, it is news), it makes Nvidia GPUs appear to be extremely desirable. Even though, logically, an item that you have to give away because it's not economically worth its market price is the exact opposite. The fact that you can use goods that you've effectively been given for free does not increase the actual economic value of those goods.
It's pertinent to note this scheme works only as long as the hype lasts. If Nvidia gives away millions of GPUs in exchange for stake in LLM startups, and the LLM startups go bust, Nvidia is then billions of dollars in the hole.
[1] (hypothetical number, it's vaguely around this order of magnitude)
Why would they sit on piles of unused GPUs when they could rent them out or use them? Even if they were free that is still not what a business would do with them.
"Why don't they just use their unused GPUs"? - because they literally cannot. GPUs require electricity. They have more GPUs than they can supply electricity to.
https://www.datacenterdynamics.com/en/news/microsoft-has-ai-...
> Microsoft CEO Satya Nadella has said the company has AI GPUs sitting idle because it doesn’t have enough power to install them
https://www.businessinsider.com/amazon-nvidia-ai-gpu-data-ce...
> Some AWS sites had room for more racks but not enough available power to turn them on
> At least one AWS team did not have "a clear forecasted path" for getting the incoming racks into data centers at the time
Do you truly believe that the cost that can be charged for inference is below the cost of electricity?
> Do you truly believe that the cost that can be charged for inference is below the cost of electricity?
That isn't the issue - it's that building brand new datacentres + the power generation to run them takes a massive amount of time/permitting/money, and by the time those datacentres actually come online, you can be sure that the price pressure on inference will be sharply negative.
It’s not the digital world where you just duplicate an object in memory. You need to find the power somewhere (new contract, generator installation), route it, add management tools (and maybe technicians), and then plug the new gpus. It’s all physical work, which also does cost money, take time, and maybe constrained.
ah this is the category error of the whole bubble.
We are so use to the digital world and the efficiency of electronic markets that it is hard to think of physical constraints in the real world.
No. I know for a fact that the take you've stated is incorrect, because I work for a startup that makes 8-digit profit annually on inference, with zero outside investment. I don't know why you've latched on to my comment to put this take into my mouth, because I never said anything resembling it. It can be true that a technology has some use while also being true that there is a bubble around people believing things about the technology that aren't true. The internet was one such example: the dotcom bust did not indicate that internet services were not financially viable, but that there were highly irrational allocations of investment that resulted in a lot of people losing a lot of money when the music stopped.
There is a fundamental difference from being able to profit on running some number of GPUs, and being able to profit from running 1 million GPUs. We do not have a business case for 1 million GPUs. Our startup's premise is that there are economically viable niches to use LLMs as tools, which is in stark contrast to OpenAI and Anthropic who are at least publicly selling the idea that LLMs are a form of genuine intelligence that will replace all human labor if you just give them another $10 billion dollars, and then another $10 billion dollars, and then another $10 billion dollars, .....
You may not have a business case for 1 million GPUs but you are not the only business. You clearly have a decent business case for some level of inference as do many others.
The gap between how many GPUs people have a profitable business case for and how many are actually out there is, however, a problem. Per their revealed financials for the pending IPO, Anthropic is deeply, deeply in the hole relative to their spending commitments, which are nearing $1 trillion over the next 5 years. OpenAI's do not appear to be much better from the more limited information we have about them.
The bubble popping will actually make business cases for GPUs much more common to come by, when businesses can acquire them for closer to their cost of production rather than at the insane markups Nvidia currently lists them for. But that won't do Nvidia much good, because Nvidia's valuation is predicated on being able to "sell" as many GPUs as they can produce at a 10x markup over the cost of production - even if much of what is being "sold" is really being given away for equity in businesses that are not financially viable.
> The gap between how many GPUs people have a profitable business case for and how many are actually out there is, however, a problem.
Is this a hypothetical gap or do you have actual numbers to back this up?
The rest of that paragraph continued on to mention two of the biggest users not actually having a profitable business case for the amount of GPUs they have.
That is a huge logical leap you are making then and it isn't supported by the evidence you gave. Are you suggesting that that two companies having more GPUs than they can use is proof GPUs aren't useful at their current price point? The simple fact is many companies would bite your arm off for these cards. Are they wrong to do so?
There is a limit to how many GPUs can be profitable at this price point. Suppose you're running a SaaS. You might be able to charge $20/mo and get a sufficient number of customers to cover costs of X amount of GPUs. This does not mean the market can support X * 100 GPUs profitably. There is a limit to what the market can bear. There are not infinite customers, in any niche, who will pay $20/mo for an LLM-based SaaS. At some point you will saturate your market of potential customers and purchasing more GPUs will not benefit you. And this even applies cross-SaaS. There is a finite pool of any amount of customers who will pay $20/mo for LLM services. If someone is subscribing to a competitor, they are less likely to pay $20/mo to you as well. All of this to say, it is certainly possible to oversupply GPUs that have a 10x markup. If the price is closer to production cost, then maybe they're cheap enough that you can offer a $10/mo plan profitably, and reach a much wider pool of customers and benefit from more GPUs. But there is a finite number of GPUs at which point the market for a sustainable business cases is satiated.
(Consumer sub prices were used for illustrative purposes but this obviously applies to token and enterprise spending as well. Although they're being a little loose due to FOMO, enterprises will not sign blank checks forever if the promised "replace all human labor" does not materialise)
Also, it goes without saying that a GPU that can not even be powered on for lack of power capacity is not being used profitably, at any price point. It could not be more apparent there is an oversupply relative to its current market price, which is a direct result of Nvidia giving away boatloads of GPUs for stakes in unprofitable companies.
OpenAI is in much worse shape because at least Anthropic has the growth to try to justify the spend. I can't see how the economics work but it is at least in some kind of margin of error.
OpenAI just seems like a black hole for money.
I think what you are describing is the sociological/ecological function of a bubble. We pull an unreasonable amount of demand forward, someone else pays for it and when the bubble implodes the good companies that survive the stress test get a free lunch.
Best of luck at the start up. That all sounds right to me. Real intelligence is specialized and ecological. The grand irony to me is that I would love to be an organism that can walk the way I do but also be able to fly like a bird and swim like a shark.
The problem is that organism would be massively too expensive to survive.
I mean even Satya Nadella famously said that Microsoft has plenty of GPUs just nowhere to put them. There are definitely plenty of unused GPUs out there. Jensen is also a big fan of scarcity (said in multiple interviews) so obviously he’d want to keep it up at all costs.
Does the math check out, though? For reference, Nvidia added $17B of non-marketable securities in 2025, and its total revenue was $215B. So, assuming all these equity investments went to GPU purchases, they only amount to 8% of its annual revenue.
Since these firms (neoclouds and AI startups) will get consolidated if Nvidia puts too much money into them, I assume the majority of their funds are coming from elsewhere.
17B sounds low.
> Corporate development-led AI equity investments alone exceeded $40 billion in just the first four months of 2026
The accusation in the headline is that this activity contributed to the general shortage of GPUs which would, if true, increase their pricing power and profit margins even on chips sold to other customers. So I don't think it's a direct comparison to their equity deals.
Is this the only reason Nvidia made money? No, obviously. But is it adding fuel to the fire? If there is a bubble will this make the fallout worse? Seems likely.
More importantly this suggests a second plausible reason the board might have wanted to wrest control of the company away from him. (The other hypothetical one being that he was doing illegal stuff.)
According to Gemini, Nvidia added $43 billion in direct equity stakes,$36 billion in AI compute partnerships, and $100+ billion in loan lease guarantees, which works out to $63 billion this year, $20 billion for the next 3 years, and $10 billion for the last 6 years based on it's assumptions.
So about a third, a sixth, and a twelth of their annual revenue respectively.
I think the larger concern is that both the revenue and assets/agreements depend on Nvidia maintaining sales, market share, and their share of capacity at TSMC/etc... If they run into trouble on any of those fronts, their revenue and assets could take hits from multiple directions.
NVIDIA appears to have made $530 billion in commitments and guarantees as of last August: https://cellcog.ai/blog/nvidia-530-billion-commitments-guara...
if circularly financed neoclouds are 5% and singapore china flow is another 12% things suddenly dont look so good
I just am unable to understand whether it's a bad thing or not, you could frame it as being circular, but you could also see it as Nvidia simply giving hardware in exchange for startup equity, is that really fundamentally problematic, is it the scale at which it was done, or is it a valid but risky tactic?
It wasn't just startup equity. For example, they are backstopping agreements between customers and to-be-built data centers, so the companies building the data centers can get better loan terms from the bank.
All told there have over $500 Billion in equity deals and "future commitments" like above since July and even more after that.
Even for a $4 Trillion company, that's still quite a lot.
IMO Jensen's affairs might have been leaked because of him being out of control and making too many deals like this. The board might have wanted to fire him, but not say the real reason.
There’s a ton of circular financing in AI but I don’t see this as part of that. Circular financing is more like companies passing IOUs around. This is more like VC funding which is pretty reasonable imo.
The scale is the largest factor, I think. If vendor financing is happening in a mature multi-vendor market on a small enough scale as to not constrain supply, it’s a less unhealthy situation than when there is only one vendor.
People pointed it out as early as 2023...
Just like we knew for at least a year already about the sales through Singapore. A lot of people called it for what it is at the time already (see for example: https://www.ft.com/content/6b1ce190-24d4-4f39-a518-ef9dae5fa...). And yet, things unrolled very slowly, then suddenly.
My theory is that once new CEO is found, especially if he comes from the outside, he will be highly incentivized to denounce past sins and disclose as much as possible to start with a clean sheet. I would bet that this is one of the main reasons the stock is tanking. House of cards is about to collapse, and that may be the trigger.
> My theory is that once new CEO is found, especially if he comes from the outside, he will be highly incentivized to denounce past sins and disclose as much as possible to start with a clean sheet.
Very much this. If you read the article it mentions that the current acting CEO was against investing into startups and disagreed with Jensen Huang.
Why is Nvidia financing neoclouds to buy Nvidia chips to rent to AI customers instead of owning the DCs themselves? At least it was my understanding that run their own DCs for GeForce Now for example
You might as well ask why they don't just keep all their GPUs and compete directly with Anthropic and OpenAI to make frontier models. The answer is the same, Nvidia's core competency is hardware and although they dabble up the stack they would rather stay focused on the GPU business. It also provides a degree of separation where they can bet on many different neoclouds and AI businesses, and some may fail but there will be survivors and winners.
Yeah obviously, but I just think of it in layers. Selling a product vs renting is a different business but closely related. Microsoft made their entire Cloud and O356 business by renting products they used to sell. Then to compete directly with Anthropic and OpenAI, it would need DCs to start. It can rent its own hardware back from cloud providers like Anthropic does or build DCs and rent to others and its own use.
It's basically the entire Anthropic IPO model too right? Start with the model, then get into productivity, design, and slowly other businesses and companies with your AI. I agree with another post here that Nvidia didn't seem particularly AGI pilled, but they are certainly DC pilled.
Well, they own chunks of Coreweave and Nebius I think?
I didn't know that, I thought it was just financing deals as I never looked closely into it. It looks like the ownership is lowish in both though (from what I can fine)
What separates a company trying to “pump sales” through “circular financing” from a company with bucket loads of cash investing in startups who use their products?
How about companies who heavily discount their product to startups to support new uses for their products because it could create new demand?
I’d say “is Nvidia the only investor in this company?” If not then clearly other investors feel like the startup is an investment.
It’s a hell of an allegation to say it’s a pump and dump scheme since those same behaviors can just be smart business practice.
Why should there be a separation? If the startups using their product wouldn't have survived on their own or found other investors injecting as much money, that's a huge sign of circular economy.
Why would their be a separation between fraud and normal business?
It's all fraud.
At best, financing like that means any honest competitor that doesn't get on the honey train is at massive market disadvantage.
Kinda similar to when niche gets flooded by VC money. Now anyone with better product will get out-competed by people that can sell at cost or below it because they can ride the VC honey train till the competitors are extinct and they have captured the market
I mean, the examples you brought are all a bit fraud.
We did but people simply keep pretending it’s not happening.
Between the circular financing and behaviour some analysts call “channel-stuffing”, it does seem that with Jensen Huang gone, the music is perhaps about to stop.
No one seriously denies the actual activity was happening, they just dispute its implications, and for good reason. Vendors frequently extend financing with the hope of making more sales, the most obvious example being auto loans and BNPL
Vendor financing is already a sign of an unhealthy market. When widespread, almost always. If the only easy way you can borrow enough to buy a thing is from the vendor, that’s bad. And if vendor financing is an increasing, not decreasing, proportion of the finance in a market, that’s worse.
Channel-stuffing, if it is happening, is usually plain illegal.
The implications are obvious: if people are using GPU scarcity and prices as a proxy for AI demand (and they absolutely have and still are, at every level), and use it as an indication that they must secure GPUs while they can, then it matters a lot if in fact that demand is being padded out and front-loaded in various ways.
>Vendor financing is already a sign of an unhealthy market. When widespread, almost always. If the only easy way you can borrow enough to buy a thing is from the vendor, that’s bad. And if vendor financing is an increasing, not decreasing, proportion of the finance in a market, that’s worse.
How much % of car loans are vendor financed?
I don’t know, because I am in the UK and I don’t know exactly what definition of vendor finance you’re working with.
For example, here in the UK, that is extremely regulated, and you’re usually not buying with the dealer’s money, or the dealer chain’s money. Sometimes you are buying with the manufacturer’s money (through a regulated subsidiary finance company or joint venture) but most of the time you’re simply buying with money from a regulated finance company, from which the dealer is getting an introducer’s fee (and for which they must agree to be regulated).
(I am not a driver and have no car loans but I am reasonably familiar with the business model from previous client business)
It is my understanding that Nvidia is pretty directly using their own money for this: there is a criticism that they are essentially “selling their balance sheet as a service”, and that their total exposure is about $200 billion.
Nvidia’s loans are not, in that sense, particularly comparable to even the loosest definition of auto loans. Not least because there’s no competition for the products.
This is all putting aside how much money Jensen Huang has persuaded others to loan. Perhaps that side of things won’t go away; I think we might see him carrying on that function in some future capacity. But it will almost inevitably be at a much smaller scale, because the market is significantly less enthusiastic about lending more money.
Almost none. Dealerships will arrange financing for you, but the actual financing comes from a third party financial institution. The dealership walks away from the deal with the full cash value of the sale; and maybe a kickback from the bank. The concerning thing with vendor financing is that the vendor is supposed to be in the widget business, not the financing business. If they are getting into the financing bussiness, that is generally a sign that the professional financers don't want to get involved; which is not a good sign.
captive lender originations account for between 20% and 30% of the us auto loan volume depending on whether you count the loans or the volume
You're being deliberately obtuse. Every auto manufacturer has a captive finance arm. That captive finance arm may be operated by a financial institution, but the financing is subvented by the auto manufacturer. Chase isn't offering 0% financing on a Subaru because they like the car, they're offering it because Subaru pays them to.
This is, nevertheless, a quite different story. Nvidia does not have a captive finance company.
The concern has to be that ordinary financial institutions might not make such loans to startups, and that therefore Nvidia is using vendor finance to create sales that otherwise would not happen.
Rather than the auto loan system, where essentially the front face of an entire finance industry has moved into the dealerships but you can still get a car loan outside it.
> Nvidia does not have a captive finance company
You don’t need to when you have a few dozen customers you’re doing this for. You meet with them and plot world dominance over cocktails.
Auto companies have the structure they do to support 1000s of dealerships and millions of customers.
Surely the credit risk level is completely different between individual customers personally on the hook vs speculative corporations?
Sure, but no matter the risk level the vendor always has the most ability to absorb defaults. It’s probably why they are the only reasonable lender in many markets
Bullshit. Most of our economy is financing. Airlines are literally credit card companies with some aircraft leases attached.
Right but aren’t you kind of underscoring the point? It’s not really the kind of vendor finance we are talking about then; it’s really just the finance industry moving into loaning other things, moving the storefront into another business. It’s pretty highly regulated.
Vendor finance of the kind Nvidia is doing is different: they are the single vendor for one thing, they are loaning to startups who otherwise might not get funding from banks, it’s coming from the same balance sheet as the product, and these loans are materially causing GPU scarcity.
In general, vendor finance of the kind Nvidia is doing is indicative of an uncertain market, and when it’s the only vendor and it causes the price of the thing to rise, that’s obviously bad.
The industry is very aware that it relies on this for its continuing growth and stability.
it's also an issue for cat companies. they get a double whammy during economic downturn because demand drops and supply rises (due to repossessed data flooding the market)
Yes, but also, vendors are best positioned and most incentivized to be the lenders for their customers. They often just provide unbeatable terms compared to all options, even better than cash for those who do have that option and ability.
A financing company usually is fully taking the credit risk. They have to charge a high interest and hope their underwriting process is sound. That is generally the only way they make money from the transaction.
A vendor can give 0% interest or even a discount to financing customers because they are protected by the profit margin of the transaction. They can also have a looser underwriting process and take more credit risks while doing so.
The enthusiasm for consumption seems real, though. Very large enterprises would purchase many more if they could.
It was talked about for so long people stopped talking about it because it got a bit boring and felt futile, in a "I guess money is fake when you have enough of it" way. It's _incredible_ it's coming out now, if I can excuse going tinfoil hat for a moment, it's like they're trying to pin everything on Huang while they have the chance.
I mean this is their second foray into making a bubble. See bitcoin GPU price craze.
And yes Jensen lied to shareholders that GPUs aren't that tied to Bitcoin while they were selling trucks of GPUs to interested individuals...
Cisco did the same circular finance during 1998-2000 dot com bubble and Cisco crashed after that.
Charles Ponzi says hello.
Nvidia wants to ensure data center companies that are optimized for AI like Nebius stock their buildings with Nvidia chips instead of AMD or ASICs so of course it is smart business sense to partner with them or take stakes in them.
Nvidia gives Nebius first access to their newest chips, ensures they get deployed at top performance, allows Nvidia to recognize the revenue upfront, and ends up owning equity in the upside.
Nebius gets the best chips first, gets cheaper financing due to the obvious security granted by having one of the most valuable companies in the world standing behind them, etc.
It sounds like a mutually beneficial deal rather than something shady to me.
By the way they report demand is 10x supply so I think everyone in here hoping for some cheap GPUs soon is kidding themselves. Eventually RAM might get cheaper because it's easier to build new factories to produce commoditized RAM but TSMC is the bottleneck for advanced chips and it isn't resolving anytime in the foreseeable future.
I'm buying the dip from this silliness.
Mutually beneficial to those two parties but not to the market, means us, mere mortals, too.
Do you base your personal decisions on what's good for the greater market?
No.
Regulation and enforcement, however...
Is Nebius an AI startup?
Nebius is down almost 60% in the last 3 months, this doesn't seem like "the dip from this silliness"
Grandparent is probably talking about NVidia.
Nvidia was 226 in August (14th) Today 161... So is also massively down, and not just since the last few days, it's been trending downward for months.
But Jensen also sold 1B of his stock over that same time period, that would also deprecate the value through higher availability. And he may continue to, especially now.
Buying the dip is a strategy here that'd be incredibly spicy, but ymmv. It's also possible that it gets a new height, unlikely but markets aren't rational so impossible to predict
> NVIDIA on the hook for an "avalanche" of GPUs from TSMC
It doesn't really sound like a TSMC bottleneck to me...
Right, that quote kind of undercuts the whole scarcity story... Sounds more like the chips were piling up and the bottleneck was power and buildings, so financing the buyers was a way to get the inventory off their own books.
> I'm buying the dip from this silliness.
Nobody cares, this isn't WSB.
Everyone is talking about the circular financing but this is the key takeaway from the WSJ article for me.
> Then he went on to describe the situation the company was in. Major cloud providers were running away from Nvidia, making plans to use alternative chips and lessen their reliance on the firm. Even worse, Huang said, the vast supply of chip wafers and memory Nvidia had committed to buying were coming at him like an “avalanche.”
Jensen's son-in-law was making these vendor financed deals and Kress the CFO now interim CEO was against them.
Large customers like Nvidia and Apple want billions of chips. TSMC can't just ramp up and down instantly. It takes 3+ years and $30 billion to build a modern fab. So TSMC has contracts where you are commiting to buy the wafers for years in advance.
I've worked for multiple fabless chip companies that use TSMC to manufacture. Amazon, Google, Microsoft, and the other big hyperscalers are making their own AI chips to move away from Nvidia. The startups like OpenAI are doing the same so the real demand for Nvidia chips is dropping. But Nvidia can't easily get out of the contracts with TSMC to manufacture and buy the chips. They would probably have multi billion penalties that would show up on their financial statements.
Some people think Nvidia is acting as a VC fund for AI startups but my view is that Jensen freaked out about the dropping demand for Nvidia chips. So he is funding these startups with circular finance deals to buy the Nvidia chips that he can't sell to the hyperscalers anymore.
> Nvidia can't easily get out of the contracts with TSMC
So, supply was committed, but demand was not. That explains actions like these [1] to finance demand. The challenge for them from a business point of view is to dominate datacenter footprint with increased supply, while balancing demand with high margins - in the face of increased competition. I would guess that the marginal demand from startups and neoclouds is already inflecting downwards due to funding constraints and datacenter bottlenecks.
[1] https://www.cnbc.com/2026/08/10/nvidia-wall-street-asset-man...
Indeed, and combine all of that with this stuff going on:
https://www.tomshardware.com/tech-industry/artificial-intell...
https://www.aienos.com/cudaplusplus/
https://engineering.fb.com/2026/04/02/developer-tools/kernel...
https://cloud.google.com/blog/topics/ai-infrastructure/torch...
https://finance.yahoo.com/markets/stocks/article/google-to-s...
I would say it's probably a complicated time to be Nvidia in general.
It doesn’t make sense anyway since those smaller companies will doomed against competition with the vertically integrated companies right?
So nvidia either has to lose by selling for cheap or by their customers going bankrupt?
You are thinking long term.
I think Jensen was thinking shorter term and Kress the CFO was pushing back.
But if you ask me to predict what will happen, 70% of the AI startups will go bankrupt, 20% of them will get bought by bigger companies, 10% will succeed on their own. That's just my generic take on tech startups in general.
This article is 6 months old but basically Jensen is saying the US should keep selling chips to China so that we don't force them to design their own AI chips. That would be bad for Nvidia sales which is the same thing that is happening with US hyperscalers moving away from Nvidia.
https://www.tomshardware.com/tech-industry/nvidia-ceo-jensen...
As long as the market keeps buying into the bubble they are safe.
And for them at worst I'd imagine they get their GPUs back and have to it sell on modest markup instead of 1000%+
40 year old gamer here having a flashback of all anti- competition practices Nvidia sustained for decades. Who here remembers GameWorks and PhysX effectively sabotaging multi-vendor optimization in titles like Witcher 3 and Watch Dogs? Expensive Gsync monitors? Trying to force OEMs to be GeForce partners in exchange for full GPU support? Forcing EVGA exit from the market? And then completely shafting gamers when crypto and AI markets opened up?
Another 40 year old gamer here. I remember all of it. (https://www.youtube.com/watch?v=ZcF36_qMd8M one my fav videos on the matter)
I also had the displeasure to work with nvidia. After years of pushing gaming cards on us for compute, the years I spent working with nvidia was full of conversations where they would list silly excuse after excuse as to why we should use the expensive enterprise-grade cards instead. All the while, we begged them to unlock driver features that were available to Quadro cards but not GeForce cards, features as simple as hardware acceleration pass-through on a remote desktop connection. It took them a full-on epidemic, where remote work became super common, to allow some of those features to GeForce cards.
So it's really on brand that they tried creating a fake scarcity to keep their prices up. I don't envy the situation Jensen is in but I won't be sorry for him.
Thanks for sharing the video. What's funny is that YouTube tagged a 10 year old video as AI-generated. Google is another company that's fallen hard from grace.
I don't think Google fell at all. It's just that more people seem to be aware of the level they've been at forever.
If you are old enough to have seen Google under their founders (bunch of CS PhD program geeks) vs modern Google (which is almost entirely run by McKinsey MBA types), there is a ton of difference. Ask any older guy who still works there. The same thing happened to Boeing.
I never understood the hype regarding don't be evil and such, how come a new generation could be so naive about corporations.
Unless privately owned, their goal is always to do the needful for those shares and sales to increase year after year.
Don't Be Evil was never about not doing any evil. It was about the understanding that Google engineers were aware of their company's increasing power and influence, understood how their actions could cause great harm to society as a result, and were concerned enough to put their foot down and force management to codify the recognition in the corporate ethos.
And which got thrown overboard the moment it impacted their pocket books. Principles are worthless if you're not prepared to pay for them.
That youtuber has been AI-upscaling a lot of his content for years. Perhaps he was able to 'upscale' his old video.
The published date should have probably been a clue.
> I don't envy the situation Jensen is in but I won't be sorry for him.
Connected. Complete lack of integrity.
If he cheats on his wife, and on his customers, he'll probably cheat on his shareholders. Hence having to quit before he's pushed.
The board told him to quit or else he would be fired. Make no mistake about it.
Yeah. Literally any time a CEO "resigns" amid some negative news, it's a very safe bet that he was actually fired.
Well - the situation with his wife or being unable to control his Jenwong or whatever one would call it, is still a private matter (the allegation of the spy situation is a bit more complex, but the other affair he had going, or at the least one, losing track here of his personal love life), is at the end of the day not really something that is or should be in the spotline for others, even though it has already generated tons of meme videos. People are very happily putting memes about the ex CEO right now - he is probably one of the top #3 meme people right now. The other day I saw where he approached two female podcasters; it suddenly had such a creepy vibe, given his weakness for females ... (though that was not a meme as such, just some seemingly accidental Jensen sneakily creeping in situation ... can't stop him zooming in on the ladies, apparently)
But customers having to pay more due to NVIDIA milking them - now that's something that really would require mandatory jail time for all NVIDIA folks involved here, IF true and verified in court (right now we can only speculate, even if we have extremely convincing proof; the courts would have to come to such a conclusion at the end of the day; and for this, the court systems have to work. I have severe doubts the courts work in the USA right now. It seems a billionaires-controlled court. Why is the whole Epstein network not investigated? Why is only Ghislaine in jail? A single person master-minded +5000 sex slaves over some 20 years or so? How is that even logistically possible?).
> But customers having to pay more due to NVIDIA milking them - now that's something that really would require mandatory jail time for all NVIDIA
It’s the task of every capitalist business in existence to “milk” their customers for the maximum amount of money they can for any given product. Everyone in business would be in jail by your metric.
This isn’t true. The somewhat infamous court case that established this is a USA only thing.
Business are absolutely free to set as their task things like “long term sustainability”, or “quality” if they so choose
Sure, not all businesses, but just like the consumer social classes their is the same sort of heirarchy in business, the top n percentile including big tech, oil, large chains, etc, are absolutely operating in the milking game.
Yeah but that’s a choice. Not a universal law.
The society can easily change this simply by actually enforcing the anti-trust laws that are already on the books.
I'm not arguing the on-paper, I am saying in reality, it's not exactly looking all fair and even as intended; en contraire + it looks much the oposite.. in my opinion.
When capitalism is working as intended everything is covered in a layer of soot and 10 year olds are logging 60 hour work weeks
Not everyone, we just need to jail a few executives and the rest of them will get the message
Well that sounds hyperbolic considering “capitalist business” runs the gamut between “trillion dollar company” and “guy down the street doing this in his spare time”
Not defending NVIDIA by any stretch, but I think Intel is the only one that allows ‘enterprise’ features on their consumer cards, like SR-IOV.
Such a complete failure of the market that NVIDIA hasn’t had any real competition. All of the vendors abandoned PC gamers though. Though the price choke point is memory, not cores.
Which makes me curious, if AMD did another HBM-based card like the Vega series, would that RAM be cheaper now than GDDR?
> but I think Intel is the only one that allows ‘enterprise’ features on their consumer cards, like SR-IOV.
They do not. SR-IOV is only available on Arc Pro cards.
https://www.intel.com/content/www/us/en/support/articles/000...
https://www.phoronix.com/news/Intel-SR-IOV-Only-For-Arc-Pro
> real competition?
many have asked why AMD doesn't make its GPUs cheaper.
lisa su and jensen huang not competing with each other on price and being related is as much of a coincidence as wuhan having a virology institute experimenting on COVID-19 and being the center of the COVID-19 outbreak
Set up a competitor and undercut them.
Patents make that difficult.
Don't let the tail wag the dog
> wuhan having a virology institute experimenting on COVID-19 and being the center of the COVID-19 outbreak
Wasn’t this debunked years ago?
No, it’s more thoroughly validated than most murder convictions.
It’s been confirmed by agencies around the world including the rather conservative German BND [0]. It’s not a conspiracy theory - it’s fact that COVID-19 is of Chinese lab leak origin. The only open question is whether that happened out of malice or stupidity.
[0]: https://www.dw.com/en/covid-pandemic-likely-unleashed-by-lab...
No. A bunch of agencies have started favoring the lab leak hypothesis with low confidence after recently reassessing the evidence. The BND has apparently favored it from the very beginning. Some others still back zoonotic spillover.
In any case, I'd wager no non-Chinese intelligence agency has the evidence to ascertain COVID-19 origin one way or the other. Both the initial confidence in natural origin and now this new certainty in declaring the lab leak hypothesis a fact seem nonsensical to me.
Low confidence? The category of 80-95% is enough for confirmation at intelligence standards. Stop protecting the CCP.
That's not going to stop the OP from bringing it up time and again in unrelated threads.
Carthago delenda est.
> https://www.youtube.com/watch?v=ZcF36_qMd8M one my fav videos on the matter
Weirdly, Youtube has labelled that video as "AI".
Which is kinda hard to imagine, seeing as it was released 10 years ago.
Owning three percent of one of the most valuable companies in the world is a completely unbearable situation to be in.
There was an article on here just a few days ago about an Nvidia crypto GPU that was sold a few years ago. This lady discovered that via voltage glitches she could turn back on features that Nvidia had turned off. She had cards that were sold with only 8 gigs of VRAM enabled that actually had 80 gigs of VRAM.
Yeah I never really shared the adulation the AI community still seems to have for Jensen. To me he was always a sleazebag.
This was the discussion - https://news.ycombinator.com/item?id=50451903
selective binning of semiconductors is not a new or inherently evil practice. that being said, someone managing to get a 170hx to 80 gigs is possibly the most prominent example of unlocking manufacturer restricted features.
80gb to 8gb seems like a bit more than normal binning (eg 5800x3d with bad core/etc cut down to 5600x3d).
HBM is quite expensive so it's strange to see so much disabled.
You can't change the HBM configuration after the GPU is manufactured, so I guess this points to some combination of "redirecting GA100 stock", "volume is too low to justify a separate spin of GA100" or "demand is expected to be transient". The savings from actually shipping less HBM would be very substantial though (hundreds of dollars on a 4-5k GPU).
As another almost 40 year old gamer, I find myself wondering why nobody else ever brings up 3dfx when discussing Nvidia. I've been salty with them since the buyout and I've remained an ATI/AMD user all this time because of it.
3dfx destroyed themselves by falling behind in the GPU race. Their later products were second rate. Nvidia just bought the corpse for the patents.
Yes I (also) had 3dfx shares that went almost worthless overnight in December 2000 (here in Europe).
That is suggesting 3DFx does not allow support Glide for other graphics card. and Apple Lightning Made for iPhone programme is as bad Gsync Monitor certification. When they were the one to ensure quality matters across the whole spectrum. Just the same as Apple. And the reality it is just business.
Have they been pushy? Hell yes, I guess everyone have a different line on this. But on the scale of business partnership and leaving money for its ecosystem, Nvidia is far from the worst. Just look at Apple, or in other industry, Walmart. ( Note: Steve Jobs used to be pretty good at that, the same as Jensen. It was actually Tim Cook who pushed this to previously unseen level )
>And then completely shafting gamers when crypto and AI markets opened up?
I believe Jensen was the one who continue to push capacity in Geforce for consumer market when they could have done 100% AI. And there just isn't enough capacity for everyone. And had AI and Crypto not been that popular the R&D cost of amortised over GPU would have been far higher on leading edge node with Big GPU design, often pushed to Reticle limit. Not only have I recounted exactly zero appreciation on any technical forums, consumer simply want their GPU to be faster, cheaper and widely available every single time regardless of its cost, when it was Nvidia who is pushing the whole GPU industry forward.
With AI cards languishing in warehouses I don't think that's the case.
And if they didn't wanted dual use "problem" they could've chilled on AI cores in their chips and went all in on 3D performance.
> I believe Jensen was the one who continue to push capacity in Geforce for consumer market when they could have done 100% AI
Investors like it (a lot) if you have diversified income streams. Sure, currently gaming is not the profit driver for Nvidia but it still adds to the valuations and having a Cuda capable GPU in a lot of homes is great for the ecosystem.
> And there just isn't enough capacity for everyone.
You are in a comment thread related to an article about Huang intentionally engineering that shortage by investing into AI startups. Why do you need to defend a billionaire?
And recently, claiming that DLSS (multi) frame-gen doesn't work on 20xx and 30xx cards despite modders being able to implement it.
Nvidia is a business but them having a (near) monopoly has absolutely been horrible for gamers.
54 year old TF2 player here, I do remember.
NVIDIA has been terrible to countless groups over the years(even more than you listed). They survived by being really good. You know who else have been jerks? Every other leading successful tech company (NVIDIA is nothing compared to Microsoft's misdeeds for example). Microsoft still going after 51 years. And now a new generation having never remembered the browser wars have fully embraced Microsoft products like VSCode. Your trip down memory lane reminded me about the numerous 'gamer boycotts' that all failed. There used to be a meme about how people signing a pledge boycotting a title would then be seen 'online' on Steam playing said game. At the end of the day most consumers didn't care. They wanted the best products and NVIDIA more often than not delivered. A company that is super polite to all their customers and partners is a company that will still be dropped the second their products stop delivering the value that customers expect.
Google used to be not jerks, Valve still are. HP - often considered the company that started Silicon Valley - were somewhat famously not jerks for a long time, but that ended decades ago when Hewlett and Packard left.
In the 1970s, installing the $500 power fail interrupt feature on the HP 2114 minicomputer was done by clipping a jumper.
Companies price based on perceived value and customer willingness to pay, not on cost to produce.
HP weren't alone. About the same time, modifying one of IBM's line printers to the more expensive, faster model was done by changing out a couple of gears.
Valve isnt publicly traded. No reason to
Valve aren't jerks, but they are stealthily inflating game prices by 30%. That massive fee is being paid by the consumer, even if the consumer doesn't realize it.
That's very ignorant perspective on it. 30% is very much standard cut in near any kind of online gaming stores and Steam's on average is lower than that.
Yes, they could drop the price for indies but they do have progressive tiering, at top you pay 20% to them and by revenue split it's much closer to taking 20% cut on average than 30%. But yes, indies are being a bit screwed there.
... if not for the fact every single cheaper platform will still get you massively less sales just because they can't compete on feature, let alone popularity of Steam.
Also the 30% funded ability to play games at all on my Linux box so I'm fine with paying the extra.
> Valve aren't jerks, but they are stealthily inflating game prices by 30%.
Nah.
From what I've heard from folks who used to do bricks and mortar distribution, that 30% is _way_ better than what you'd get cut out in that system. [0] From the perspective of the person publishing a video game, you also get waaaaaaaaaaay more for your cut with Valve than you'd get in a B&M distribution. _So_ much more. The same is true for the purchaser and player of video games.
[0] If for no other reason [1] than the fact Valve will sell your game forever, unless some government or powerful payment processor very strongly demands that it not be sold.
[1] ...and there are many other reasons...
True. As much as we hate on companies like Microsoft and Nividia, or people like Bill Gates and Elon Musk, it has to be acknowledged that above a certain level, it's a eat-or-be-eaten world, and I'll never reach that level.
Remember when "but PhysX needs special Nvidia GPU technology"...just so we found out PhysX didn't even run on GPUs?
well, it could run on gpu
Not to mention the benchmark cheating, which I believe we see today with LLM models too, just not via drivers.
Add false advertisement (GTX 970 3.5+0.5 GB VRAM debacle) and blatant benchmark cheating to the list too.
Yup, they've been sleezebags all along. Nvidia has always treated their software as a tool to nobble the competition.
They're just another rank monopolist. We should celebrate their fall, maybe there will be room for some real competition.
>We should celebrate their fall, maybe there will be room for some real competition.
How are you going to get more competition when the entry cost is so high? The only competition will be the Chinese willing to dump endless cash into this but they are not doing it out of the goodness of their hearts either and it will still take years. If NVIDIA starts to falter then in the short term things will get even more painful for consumers as AMD becomes the new crummy company people love to hate.
What you need is for the interfaces people use to not be vendor-locked. At which point Nvidia doesn't have to "fail" in the sense of going out of business, but rather just have the ecosystem switch to APIs that are supported by not just them but also AMD, Intel, Apple, Qualcomm, etc.
At which point customers are buying for hardware price/performance or performance/watt rather than because they care which vendor they're getting it from.
And then you'd still have the biggest companies making the highest performance hardware, but you could also get something from the RISC-V people which had e.g. half or a quarter the performance of the enterprise GPUs but the same amount of VRAM, for less money.
This is the sort of self defeating mentality that creates evil monopolies. I used to read gamers berate AMD for their "driver problems" when their drivers simply couldn't emulate Nvidia's intentional tricks to force game developers to build for NV cards. And then they would moan when card prices skyrocketed. Don't know why you think AMD is "crummy" their greatest sin is that they didn't play these anti-competetive games and were screwed by other companies.
People seemed to be programmed to be sycophants or at least willing victims to rich and powerful people and companies, even as they royally screw them and empty their pockets. I never understood it. As the song goes: we'd make great pets.
The barriers to entry are not capital costs they are compatibility moats. Wake up and smell the coffee.
I always thought that Nvidia's presence in the Khronos Group was a farce. On one hand they were vendor-locking as much as possible at the expense of the industry, and on the other they were "contributing" to the open languages and protocols.
Dirty secret of "open" source: it's a strategic collaboration between big vendors. It's very rarely someone's hobby project. Almost all Linux changes come from hardware vendors.
That isn’t dirty or secret.
"The reason behind this was to maintain the perception of ongoing high demand and to move an oversupply of semiconductors from TSMC."
Huh. The circular financing was figured out a while back, but this is something I had not seen before.
This could all work out. NVidia stock drops. AI company stock drops. The more efficient approaches to inference and more open models take over for most mid-level applications. The need for insane numbers of data centers is reduced. AI works fine and costs less.
I am not entirely sure how this is circular financing. And how it is creating supply and demand curve bent to Nvidia's will.
These Startups or companies wanted Nvidia's GPU. Nvidia is helping them to finance it. That is basically Apple Upgrade programmes using the companies share and its GPU as collateral. Had zero start up being using Nvidia, the demand from Hyperscaler alone is enough to fill up all the current supply. And that is ignoring Gaming market.
This largely works because the current AI bubble demands drive the market price of Nvidia GPU to new heights ( along with RAM price being 5-10x of that is was ). Nvidia commands margins of its GPU allow them absorb and finance this operation with relatively very little risk.
The claim is nvidia is making the chip shortage look severe by overbuying chip production - and then pushing those chips downstream at artificially high prices using circular financing.
Of course the question is: is there an actual chip shortage or not? How much of Nvidia’s strategy creating a fake shortage? Just noticing there’s a shortage isn’t proof that a lot of it isn’t artificially manufactured.
well, there is DRAM shortage.
Not sure if there is actual chip shortage (CPU prices don't seem to soar up and it's same fabs making them) but the circular financing/chips stuck in warehouse at the very least increased the DRAM shortage
I agree completely. Nvidia is clearly trying to diversify its customer base, not least because all their big customers are developing their own hardware to compete with Nvidia chips.
Doesn't this make Nvidia a VC? Are they a good one?
What happens if/when most of these startups fail?
Nvidia net profit and cashflow are well above >100bn, they have approximately zero debt in relation. If some of their investments fail, and they will, I'm pretty sure nothing will happen at all beyond a write-down. It's also not obvious at all how this is bad practice on nvidias part, what else are they supposed to do with all that money? Let it depreciate in their account? Distribute even more than the 30+bn they already do to shareholders?
Repossess the GPUs and put them back on the market?
Larger supply of capital means lower cost of capital for the borrowers. Would these startups have been viable without lending from Nvidia?
At the end of the day, these arrangements are a sort of discount on GPUs. Is it a good sign if Nvidia needs to give discounts to sell their GPUs? Do we actually have an oversupply of GPUs if Nvidia wasn’t manipulating the market?
I see it more as leveraging (and also diversification). NVIDIA gets a pile of money. Rather than sitting on it for no purpose NVIDIA doubles down on AI success by purchasing ownership in AI companies that use its products (although not exclusively its products).
This way even if some other hardware eventually powers AI, NVIDIA will still benefit. The only thing needed for NVIDIA to continue doing well is AI as a whole to continue doing well. Which is almost given.
The fact that well financed NVIDIA customers now buy more NVIDIA products is additional benefit. So what NVIDIA is doing financially seems like a no-brainer.
More efficient models run on consumer hardware, cutting out the need for datacenters and nVidia to some extent.
I have no investment in Nvidia and have no reason to like them or hate them.
But I think this is backwards. I remember 4-5 years ago waiting for AWS and GCP to schedule us an 8GPU machine (gcp had 16 even) for hours while paying them crazy rents for the GPUs that paid the hardware in 2 months of usage. This while components and servers were actually cheap.
The hyperscalers are monopolies that eventually some admin will grow balls and will have to break up. But this is wishful thinking and nVidia didn't do a bad job working them around. Now with other monopolies drying out components like RAM from the market, one can actually rent GPUs with less effort from neoclouds.
It doesn't seem like anyone's going to be breaking up any monopolies in the US anymore in the near future, if ever, excepting some really massive sociopolitical shifts.
And thus nVidia were right to invest in neoclouds. Somehow agreeing to be squeezed would have been the worse option
Mm, willing to bet you have significant investment in Nvidia via index funds.
I live in Switzerland and I am not directly invested. But the Swiss national bank owns many us stocks. Pretty sure we are all somewhat connected to nVidia.
Lots of comments seem eager to declare everything over, done for, and said, and that doesn't seem to be nearly the case. The eagerness to declare it over is, I think, reflective of a desire not to examine the idea that actually the GPU demand really is there.
Maybe the real retrospective on this will be on how the news was able to forward such shaky narratives around financial doom for so long despite the underlying facts not matching.
Half the room is still entirely against this AI thing on an ideological basis. I have observed several developers using AI tools badly on purpose (malicious compliance) in order to further the narrative that this could never work out. The prospect of some AI 9/11 transpiring (they even halted the flights) is hope to these people. A certain cohort needs it to fail.
"Those who don't build must burn." - Ray Bradbury, Fahrenheit 451.
The knives are out for Jensen Huang. The piling on of the articles by corporate media indicates Huang was purged. This is a systemic takedown.
This is the Western way of purging which we can contrast with Chinese way of purging when we remember Jack Ma.
Jensen & Nvidia were never AGI / ASI pilled.
As a result they never seriously pursued frontier research for open models - which could have easily absorbed any excess compute they planned for.
On the other side their customers are rapidly becoming their competitors and will happily eat up spare capacity at TSMC if nvidia can’t fulfill its obligations.
Edit: to be fair there are several counterfactuals that could have played out negatively if nvidia decided to go into frontier research or go upstream like Elon and build their own fab. Jensen himself said they were completely focused on building general purpose compute and his bets had turned out to be right so far.
To be fair their Nemotron models are pretty good. The Parakeet speech-to-text model is also pretty good. That being said these pale in comparison to the frontier labs. They should've invested more into it, but I understand that they don't want to piss off their biggest competitors.
A friend of mine works on Nemotron. He stated quite plainly that they intentionally don't push the boundaries for the reason you state. It's similar to when companies create reference designs that show off the features of their real product, like Google and their Pixel phones
What would investing in the models give them ? They already are selling chips at massive markup.
Investing in tooling so more people get on their stuff is direct return, but having yet another AI model is of little value aside from being a test bed for their AI tooling
* they don't want to piss off their biggest customers.
:D
what's asi
artificial super intelligence ... it's AI that's (vastly?) better at everything some human could do, I think.
Jensen said AGI is here when Astra was released...
https://fortune.com/2026/09/09/markets-agi-nvidia-singularit...
I wouldn't disagree with that. Astra was the first model that is actually really smart, doesn't constantly hallucinate, writes high quality code etc.
If it isn't AGI, it's at least something that shows that "AGI" is not a useful label. You wouldn't argue that we don't have Artificial General Flying because planes can't flap their wings.
A plane or a drone can do any aerial movement a bird can (in a shorter, less energy efficient manner). Can Astra do a software dev job alone without supervision? Let alone any other job.
>> Astra was the first model that is actually really smart, doesn't constantly hallucinate, writes high quality code etc.
Nope, that was Fable.
Actually that was every model that was released so far, and only in hindsight people noted that it actually was not.
Literally ever large company creates programs to fund extended development and therefore demand.
Google is constantly trying to give me free credits. They could give me the money (circular) or give me the credits (usage + write off).
Companies that receive Google credits get a possibly taxable benefit, the service is 'consumed', Google gets the write off etc..
Worse, I think companies that warehouse gpu's will buy newer more efficient gpu's by the time they get their data centers running but won't resell the older but unused gpu's afraid to let their competitors to make inference.
The cost of GPU is high enough that it costs like decade+ in power, power efficiency is not a major factor on return on investment.
Clouds are offering previous gen GPU capacity just fine
Isn't that straightforwardly explained by typical hoarding behavior, not " afraid to let their competitors to make inference"? During the pandemic people were hoarding TP that they couldn't possibly use within a reasonable amount of time, but it'd be crazy to accuse people of doing that because they were afraid of their neighbors having clean asses.
Simple. If everybody stinks, nobody is stinking.
If you cannot wipe efficiently, you better make sure nobody else can too so that no-one can call you out on that.
>If you cannot wipe efficiently, you better make sure nobody else can too so that no-one can call you out on that.
But so far as we can tell, American proprietary models are more compute efficient than open models? They're also practically cheaper, if you factor subscriptions into account. Does that mean we should be decrying all the GPUs used for GLM, when they can be put to better use for claude or chatgpt models?
> Does that mean we should be decrying all the GPUs used for GLM, when they can be put to better use for claude or chatgpt models?
That wasn't my personal opinion, just guessing the mindset behind those who want to prevent competition.
Funny enough that seems to be the exact stance of OpenAI/sama.
https://www.tomshardware.com/tech-industry/data-centers/open...
I don't care for Nvidia, witness all my PCs using AMD cards for ages and never wanting to buy their stock because some of their practices I disliked.
But I think this is at least to a degree tinted hindsight - it generally makes some sense to have an interest in funding customers who might grow to be even bigger customers. And it's been totally public for ages.
AMD is smart enough to just slash their consumer GPU output by 80% and directly spit in their consumers' face, rather than supposedly go through this game.
Well, Nvidia knows every other established cloud provider is developing their own in-house training and inference stack.
I’m pretty sure Jensen is not the kind of person sitting around while AWS strip-mines his tech.
Crowding out the datacenter buildout with neocloud backed by Nvidia inventory is IMHO a reasonable strategy
Most here are missing something very important: since forever, corporates do all that is in their power (mostly legally or gray area, but sometimes even illegally) to make more money.
Nvidia is to blame? Maybe yes, maybe no. But who really need to be blamed is who is there to control! What is really broken is the control & accountability feedback loop.
That is a very negative way to state facts. I doubt the neutrality of the authors.
Exactly.
"Banks allegedly engineered inflation by funding[1] consumer's spending"
[1] aka. credit cards
But that's exactly what happen in 2007-8 crisis.
No? Whatever banks were trying to do in 2007, it wasn't "engineered scarcity" or even inflation. The only overlap is that lending is involved and people hate it
but thats how banks actually create inflation under the limits of the regulators, isn’t it?
Thats what "spin" is. Things that are technically true but massively misleading, or selectively applied.
While I generally dislike scaling consumer finance up to larger markets, to go with your analogy.
Isn't the "credit" that Nvidia extended secured by the value of the GPUs and Datacenters the creditors end up buying/building? If so then should the value of those things suddenly plummet Nvidia is left holding billions in junk debt?
Yes like iterate appeals to neutrality by people with inherent skin in the game
People who are inherently biased to select themselves, thus upending any rhetorical appeals they are capable of the mythical perfect neutrality they appeal to via generalized words
People don't have to be neutral. Neutrality between good and bad is mediocre. If you disagree with them make an argument, don't just lament the end of enlightened centrism.
enough fallacies here to drown Cicero. ad hominem circumstantial with a side of false equivalence
Was funding openAI a smart move which allowed Nvidia to capture the value being ingenerated downstream, or was it engineering scarcity?
My view is that it can be both. However the idea it was solely driven by a desire to engineer scarcity is absurd.
I worry the mindset which sees it in such stark terms would never have built CUDA at a gaming GPU company.
Jensen was a philanderer but also a visionary CEO and I don't think it's likely he would have seen temporarily boosting demand through bad loans as the right strategy.
hopefully prices come tumbling down, I need a decent GPU stuck with crap at the moment.
Given that is a sentiment I hear, and feel, a lot, it's unlikely the prices will come down much. It seems there is a lot of demand at lower prices.
80-series at MSRP would probably make people happy, though it's more than I'm willing to spend for gaming myself.
There is a lot of demand at higher prices too!
And that is the core of the issue!
Already down 15% or so from the peak. Here's to hoping they will drop a lot more than that.
Is that a recent development? A quick search didn’t give any evidence of a reduction in prices for GPUs.
Last week or so.
https://tweakers.net/pricewatch/2290192/nvidia-rtx-pro-6000-...
Even if NVidia crashed and there ends up being an oversupply of GPUs or TSMC fab slots, this doesn't change that OpenAi and Google still need memory for their own hardware accelerators, so the price of boards wouldn't go down by much
Part of me wonders (maybe naively) if with falling cost of AI inference and improvement of models means there is an oversupply of inference infrastructure. since we may reach a point where no one needs more and everything you could want can be done by the machine and adding more compute for most users is not any kind of benefit (like it was before LLMs there was an obvious ceiling where the majority of people did not need more compute).
I know Jevons paradox is a thing and I could see it going the other way as well but the first possibility seems to be ignored and I am not sure we can. Eventually demand for training might dry up as well if are models become largely very good and only a bit of fine tuning is required for most applications.
I don't see how it helps to think so narrowly about the computation needed solely for training when we are clearly headed to a future where tons of realtime applications (think robots) need to do insane amounts of processing ASAP while doing time-sensitive tasks.
IMO its copium to think that chips which have 10x more demand than supply are suddenly going to be easy to get as "AI is eating the world" like software did over the past decades.
I think there is a question of how much of that demand is real. If GPUs are sitting unused in boxes and/or if NVDA has been artificially juicing demand either through basically buying them from themselves or selling them to China through an intermediary then the 10x demand comes into question.
That leaves the real buyers who are also starting to run low on capital.
Finally, demand doesn't need to go to zero for there to be a price correction. Just dipping from insane demand to elevated levels would lead to a significant price drop.
You are definitely right, mrgordon - this isn't an infinite scaling, "one extra copy cost essentially nothing," software issue. Video cards are physical. You can't just sell more copies with almost zero marginal cost like software. Each video card is a physical good that is subjected to all those physical laws.
I was not trying to deny the corporeality of GPU's (or cpu and memory), only that there might be an oversupply given the rate of buy up of these things and the amount of start ups who have brought these things and will fail and liquidate or liquidate hardware as they pivot or go into just offering inference.
Secondly that the frontier model providers will not necessarily want to buy these up as the aforementioned lower demand for training (or costly and memory intensive training) and cost of inference goes down (and possibly requests as the models get better or at least plateau).
Further TPU's and if model weights do eventually stabilize then ASIC's might make more sense.
And lastly as models improve and make less mistakes the requirement trying things in parallel traditional compute may also go down. I think their is a quantity intercept (The demand for compute if it cost nothing would be a finite number and may go down rather then up with advancements in cheaper inference and accuracy) for compute both AI inference and traditional compute.
real time visual data processing for these applications seems to me to not be that expensive and the thinking part will be done as a swarm. There is some real quantity intercept for the demand of compute that does change over time but one can imagine it going down with better inference not to mention ASIC's.
I think there are two sides that want a particular outcome one want gpu's to get cheaper (like I admit I do), others want there investment to work out (both might want to huff copium at some point, who is huffing here is not easy to tell).
Some years ago I came across this site: https://sites.google.com/site/1024cores
The author is a developer working on software that scales to 1,024 cores and greater -- which is within spitting distance now thanks to 256-core AMD EPYC processors. If you count hyperthreads as a "virtual core" then a dual-socket system gets you there!
That blog made me realise that almost all software can't utilise 1,024 cores, not even close! Microsoft SQL Server, as a random example, tops out at 64 cores for any single query.
Similarly, people couldn't utilise a machine that big, not with pre-AI software, except for certain embarrassingly parallel codes such as simulations and 3D graphics rendering.
Now... NOW... there's no upper limit. None. One person(!) can cheerfully utilise millions of cores, billions even, and there's no end in sight.
If you think one conversation thread in "ChatGPT" is all we need, you're not seeing the big picture of what's possible here.
Those math proofs OpenAI produced were created with tens of thousands of agents running in parallel, orchestrated by thousands more agents, and overseen by hundreds of agents, all triggered by someone typing as little as a sentence or two to start that avalanche of compute!
With that kind of AI power at your fingertips, huge, unthinkable projects become a fun exercise for the weekend:
- Translate the entirety of Wikipedia to every human language.
- Rewrite the entire Linux kernel to Rust in one go
- Rewrite all open source C code to Rust.
- Formalise every maths paper ever written.
Etc, etc, ... without end, without bound.
I am arguing that their is an quantity intercept (The demand for compute if it cost nothing would be a finite number and may go down rather then up with advancements in cheaper inference and accuracy).
Sure you can do all these things you mentioned but eventually even if it was free they would be done and doing some of these things your self would be annoying and a waist of time. Once some has formalized a proof why would some do it again and why would some one rewrite a program again, it will still take time and human effort over just using it. If you just spend 1 minute with each agent of your say 10000
I really don't think most people want to be running tens of thousands of agents and would not find a need for that many agents. if you it takes you just 1 minute of looking at output of your agents that would take you 1 year and 52 days. I think you have to admit there is a limit. Though I could find busy work for my agents, you could do the same with computing before hand such searching for primes, there is a limited thing that people want out of their machines is my point and people who would run such things would be a minority if they exist at all.
Unfortunately these are server sku. I don't think you'd have good odds of getting a video signal out of them.
You don't think the limited availability of consumer gear is at least partly caused by what's going on in the server market?
Similar to the fact that supply of consumer RAM is currently low.
Plus some people are buying consumer gear and trying to use it commercially.
Butter and guns
Crypto, then AI. Demand for GPU's has skyrocketted, and the number of foundries hasn't (much to the chagrin of every nation state).
Same. I replaced the pads and paste on my now ancient RX 580 in the hopes of surviving to the next time prices are affordable.
For anyone wanting to do so - you can! You have to make sure you nail the pad thickness though. That can be tough because it can have changed between revisions of the same card. Thankfully, AI is pretty good at combing through past data to figure out what you need. Also it voids your warranty.
Could is simply be that their indirekte sales to China went down, so they had to prop up demand elsewhere?
https://news.ycombinator.com/item?id=50424604
Which can work, but probably not indefinitely? If/when demand slows the prices on all of the hardware goes down, Nvidia's earnings fall and then the stock price.
So I was under the impression that Jensen had arranged early deals with every chip maker to lock in a good price for basically the next 10 years, but it meant that nVidia were obliged to purchase them.. So they the needed the scarcity and demand to be constantly growing or else they would still be on the hook for the chips coming over the next ~6/7 years regardless? I'll try find the article.
So this is just clearly their best strategy, right? And nothing about this is illegal btw
I don't understand. You can't possibly make more money by buying from yourslef via proxies. Yes, that would raise prices but you could have just raised them yourself at will to the same effect. Is the article alleging a stock pumping scheme?
You raise prices on the back of scarcity that you quote your customers "sorry but because there are so few GPUs and your neighbour is paying double as much, that becomes the base price" - that the neighbour is actually getting a cut isn't mentioned, that scarcity is faked by investing in companies that buy GPUs (perhaps only on paper) isn't mentioned, and the fact that it's all just pure capitalism and how it is played is ignored.
Why are folks getting all excited? This is the game called capitalism that we all wanted and that we all know is the best ever system discovered to rule over others. Folks are getting annoyed because they didn't profit from it.
Just like Amazon becoming a loss leader in many markets off the back of AWS profits. They enter a random market, undercut the prices until the competition is removed and then they raise their prices. Rinse and repeat. All because they are making huge profits on AWS and can cross finance this strategy.
No one is complain about that. Because Amazon is on the good side of capitalism. Why Nvidia is now on the bad side of capitalism - who knows.
As far as the billionaires are concerned, it all comes down to this: if they weren't crooks, they wouldn't be billionaires.
Taylor Swift?
The shenanigans her team pulls off for pure market capture (timing of releases, formats, etc) against specific artists that pose a threat to her dominance is well documented. So, yes
There is no concrete evidence of this.
Do you have any evidence of this? I pretty much just take it for granted that this has been happening.
Forgive me, but I feel the take you describe is part of the broader problem we are experiencing now.
<edit> oh god, I just re-read my response and face-palmed at me. I'm trying to think of how to express what I mean. Here's the shitty version: Dude says "this article doesn't really show any evidence - is just impression." You say, effectively, " do you have any evidence that they don't have evidence?"
Not the greatest of retorts, but I feel compelled to let it stand. I hope you get a little bit of what I mean.
OK. So they're not doing circular financing deals then?
Objectively: what better use is there for the extreme amount of excess cash they generate? I think this is an excellent strategy.
It’s not like they can invest in fabs or factories.
Ed Zitron and others have been saying this for months
Context for those that have missed it: Zitron claims Microsoft bought 82 billion dollars of Nvidia GPUs now sitting in warehouses unused.
https://www.linkedin.com/posts/edzitron_joined-the-tech-repo...
It is completely normal and expected for large companies to invest in others who can use and grow the use of their products. It’s equivalent to a microscope manufacturer investing in a microbiology company.
Here’s a quote about Henry Singleton, one of the most successful ever:
“CEOs need to do two things well to be successful, run their operations efficiently and deploy the cash generated by those operations.
Most CEOs focus on managing operations. Singleton, in contrast, gave most of his attention to the later task. As Warren Buffett observed, very few CEOs come prepared for this critical task of capital allocation.”
How has Nvidia funded those startups? Is funding somehowntied to the value of Nvidia? And how does that affect those startups now?
… so the burst began with a spy
My brokerage account allows me to borrow money against my money. Actually, they encourage it.
What happens to neoclouds when the bubble pops. nvidia stops circular financing, and all of a sudden they can’t pay their debt. This leads to the DCs getting bought cheaply by hyperscalers and you have a monopolistic AI market with google/fb/amazon and likes are running the show again.
I feel there's just enough value behind the crazy proposition that there won't really ever be a classic .com bubble pop. That's the thing: there actually is a lot of value in this tech. May some of the current big players crash and burn? Sure. But the tech is undeniably powerful - things will, and are, changing.
It's not about value, but return. Everyone likes to mention circular financing, which in of itself isn't an issue. If I have an amazing idea and NVDA wants to loan me money that's fine. My idea works out and we all end up billionaires.
The problem comes in if my idea doesn't end up generating a return. NVDA has not only sold me my GPUs, but it's also leveraged itself to my return. Repeat this across many businesses, none of which are generating returns yet. This is why when/if this unwinds it's going to be pretty catastrophic. As Charlie Munger said, "There are only three ways a smart person can go broke: liquor, ladies, and leverage".
Amen
> there actually is a lot of value in this tech
Unlike that weird technology "the web", the basis of the .com bubble. Turned out to have no value in it!
Sorry deaux, but I can't quite understand your response - you're using a "I disagree with you" format, but it sounds like you agree with me! Can you clarify a bit?
He's saying that the companies can crash and burn while the tech stays around.
So all those vendor financed startup may die, taking the VC funds with them, but that is irrelevant to whether the tech stays around or not.
> I feel there's just enough value behind the crazy proposition that there won't really ever be a classic .com bubble pop.
You then followed up by pointing out a way in which it's exactly the same as the .com bubble. One might even say it's their biggest common ground.
This framing is absolutely ridiculous. Nvidia is trying to diversify its customer base away from an oligopoly of hyperscalers and create demand for its product through vendor financing. Any scarcity is clearly incidental and a result of capacity constraints.
You can criticise it as a risky financial structure, but claiming bad faith is totally false in my opinion.
LLMs and GenAI in general could have been a useful technology that could have grown at a normal rate and been useful the whole time. Instead it was overhyped, stuffed into everything and most importantly over financed so much that it has become a bubble ready to burst and poised to bring a lot of pain to a lot of people.
Lucent did similar things in the late 90s / early 00’s. Helps make the bubble bigger. We all know how this is going to end.
never buying nvidia ever again. even if amd is 2 times slower and 2 times more expensivee
Makes me think back to this!
"Nvidia has been one of the worst trouble spots we’ve had with hardware manufacturers. And that’s really sad because Nvidia tries to sell chips – a lot of chips – into the Android market. And Nvidia has been the single worst company we’ve ever dealt with! So Nvidia, fuck you!” —Linus Trovalds, June 2012
https://m.youtube.com/shorts/e0xE4YBrF5E
The article from WSJ that this article is based on tells a completely different story. That it was Jensen himself who was considering pulling out from supporting smaller players because the shortage was forcing bigger ones to look for alternatives to Nvidia.
The conclusion it was doing this to create artificial scarcity is made by the linked article, based on, well nothing. It might be correct, but it's not what the referenced article says.
There would be scarcity with or without these neoclouds, but I'd rather be in a universe where neoclouds exist than just the existing hyperscalers.
The whole AI “GPU scarcity” thing has been a pretty obvious house of cards for a while now.
How do you mean?
Many HNers didn’t know and are now speaking in hindsight. (They love doing that to appear smart) Otherwise they would have shown the receipts about it years ago.
Nvidia did a great job at engineering a central bank-style AI funding bubble for as long as possible. Unfortunately, Cisco did the exact same thing.
Before, there was denial about the circular financing bubble, now look at them believing that a crash is coming.
Source: https://www.wsj.com/tech/jensen-huang-colette-kress-nvidia-c...
403 - Access Denied Access denied
Status 403 Trace ID 0HNQ10T1IEVBA:000001B6
They even tried to reinvent mining with Proof Of Work under AI sauce.
There is circumstantial evidence that, NVIDIA and Together AI are behind Pearl's "useful" PoW AI mining vaporware. https://news.ycombinator.com/item?id=48422809
commit 2 days ago, these clowns
https://github.com/pearl-research-labs/pearl
A WSJ article filtered through a gaming enthusiast website filtered through a general tech enthusiast website.
Here’s the original article: https://www.wsj.com/tech/jensen-huang-colette-kress-nvidia-c...?
I wonder how many shocking revelations we will receive from the current media circus. What is next, that NVidia was seeking profit?
According to our anonymous company sources, once during an office party, Jensen Huang went to the bathroom and did not flush.
What scares me is that anybody could believe this garbage. It costs me $1 to make, I sell it for $5. Good deal! In fact, such a fabulous deal, I'm going to do this: Make 2 for $2, sell one for $5, then loan these other dudes the $3 I made in profit plus go $2 in the whole for a total of $5 so that they can give me the $5 back.
The more often you do it, and the greater the margin becomes due to squeeze, the dumber it is.
The first time around you sold a GPU for $5 and took payment as 5 startup shares at $1 apiece. Now you go back for round 2 and the startup says their shares are trading at $5. Will you still loan them the money and exchange 1 GPU for one share at $5?
You get less and less of their company each time and you've already peaked because future funding rounds can't keep being valued higher.
The trick only works once but everyone thinks it's a perpetual motion machine.
What you see is liquidity demands outpacing the system's ability to supply, and this his how industry partners in the chain keep the cause spiraling upwards.
I thought we knew this already? Seems like some nice info is being redrummed up.
I imagine the shortsellers and put option holders like that.
I mean, preventing bubbles is literally the reason short sellers are allowed to exist. When they see a stock that is overpriced, they help it correct. Innocent people lost a lot of money on Enron.
At this point, I am eagerly waiting for this AI song-and-dance to collapse so that I ( and my employer too) can purchase a decent specs system again.
I still do not see the prices coming down much as the demand for GPUs on the lower end is still pretty high.
Sorry, ramshanke - there really is a lot of promise to this tech. Will some of the current big payers collapse int he process? Definitely could happen. But there's no way around it: there's a lot of value in this new tech, and it's here to stay.
Well nobody expects a big shark to blissfully swim in the same tank of — among other — Larry Ellison, passively waiting to be chowed down.
The other cloud providers are building (copying) their own hw/sw stack so the least Nvidia would do is to standup its own cloud… indeed it’s what Jensen has been doing all along, the smuggling allegations are likely to be overblown.
Lol the guy funds startups and suddenly that's a crime. If they didn't fund startups, they would be blamed for not supporting the ecosystem enough. What a farce.
Terrible reporting all around this situation, especially by NYT and WSJ. Then all the other news sources repeated the same nonsense.
- Singapore govt issued a statement clarifying that WSJ fabricated facts. [1]
- It's been clarified now by the President's Council of Advisors on Science and Technology that there is no convincing evidence that Alice Huang is a spy. [2]
- The statement that Jensen called the new interim CEO ‘a deer in the headlights’ actually hurts NVDA stock, as it lowers the confidence of investors in her and I'm sure WSJ knew that before posting this speculative article with no cited source.
This looks like a hit job on Jensen and Nvidia. NYT and WSJ have spewed false facts with no credible sources (just "anonymous" sources) to discredit Jensen as much as possible and hurt NVDA stock. Jensen probably cheated on his wife, but mere cheating is not grounds to remove a very competent leader from the company he created.
[1] https://www.mha.gov.sg/media-room/newsroom/clarification-sta...
[2] https://x.com/DavidSacks/status/2121070881258504395
> This looks like a hit job on Jensen and Nvidia.
I honestly don't think this should be even a question at this point. This is systemic and organized. The pattern of the takedown is recognizable as well. That NYT and WSJ are teamed up is also informative.
I wonder: Is Jensen Huang the Jack Ma of the capitalist world?
https://www.ft.com/content/1fe0559f-de6d-490e-b312-abba0181d...
https://wallhop.io/https://www.ft.com/content/1fe0559f-de6d-...
Man, imagine if Kodak put out photography courses, or Black Diamond sponsored a climbing team lol.
I find it curious that you would consider those even remotely similar comparisons.
They are comparisons.
What is 'curious' is how everyone on this doesn't recognize that these programs are extremely common.
Every large company has some kind of vc, bd or developer program for this kind of thing.
Free Google credits are similar - they are 'giving companies money to buy google services'.
What do you think that is?
It's not cash, but it's economically equivalent if not financially.
The service is consumed, companies get 'value' they have to declare, Google gets the write off.
What makes all of the comparisons in this thread curious is the vast difference in scale.
And so?
An engine maker makes money selling engines for energy production.
Then someone invents cars.
The engine maker sees a 10x bigger market, but they have cash and the car inventor does not.
The engine maker funds the car inventor, to create a big distribution channel.
Some things are larger in proportion.
There's nothing wrong with this as long as investors are aware of the structure.
Would hate to see Fender giving artists sponsorphips.
In what worlds would Nvidia not invest in adjacent startups? In what worlds would these startups not be encouraged/obligated to use their investors hardware?
Been saying for years that we’ll be seeing a wave of bargain-priced GPUs, memory and hard drives before long. Maybe they can turn these data centers into Amazon distribution centers or apartments.
What's funny is that I built a computer for my son exactly a year ago. I think we spent 550 Euros on a 5060Ti 16GB. Today the same exact card (half-length) is >1040 Euros: https://www.amazon.de/dp/B0FDQXHYFW
Every other component has also gone up in price, bigtime. Especially the SSD.
This is, I think, unprecedented. I'm old enough to remember when a 1-year-old computer was considered "old" and all computers would depreciate fast.
Prices sure have got a long way to fall before we're back in Nov 2025 territory...
I'd love to attend a rave at an abandoned data center.
Sorry to see you get downvotes, xvxvx, for an honest (but I feel very incorrect) take, but I understand their impetus: there is a lot of value and power in this crazy new tech. Some companies may bite it, but the cat is out of the bag - in some form or another, the new AI technology is powerful and it isn't going anywhere - and we are already seeing the significant value it provides.
If it's the case that for years you've been saying it's right around the corner, you've been wrong every time so far. That said, this time you still want credit for being right?
Broken clock theorem..
NVidia enables people to buy their products. Oh the horror.
The middle finger that Linus had for Nvidia for 10-20 years ago, still ages well and true even to this day.
Like all bubbles it comes to an end when people state the same thing we knew five years ago but suddenly have the clarity to understand why it is stupid. But only after the stock price goes down.
> we knew five years ago but suddenly have the clarity to understand why it is stupid
It is the same in all manias. Our critical thinking gets cooked when everyone around us is doing something silly.
So the CEO 'laid into' the CFO but sounds like she didn't push back all that hard. Seems like something leaked by Kress to make her seem clean, but just makes her seem dirty and weak.
If this is truly a problem, it's her job to say no to the CEO. They need to clean house at the top and hire someone like Johny Srouji to right the ship.
Wouldn’t this be exactly what you do if you wanted to boost the stock as much as possible in the short term?
Seems like a great way to cash out at the top
so if this is true... we should finally get some gpus right?
After previous bubbles there was a lot of excess equipment to be purchased.
The GPUs going in datacenters are not usable at home right?
Depends, you buy a used server off of eBay or 3d print your own fan shroud. Waiting for prices to drop some and then I’m looking to build my own rack in the basement, so I can use open weight models and not directly support horrible data center practices.
Not for gaming they don't have monitor outputs and most of them aren't even in a standard PCI-E format. Some of them might be useful as a home AI accelerator with adapters and jerry rigged cooling.
I have MI50 32GB server cards at home with mounted blowers and I can use them for gaming.
Some of them, sure. You can invest in a server mb, and put a rack in your shed or basement. If someone was selling B100 like that, I'd happily buy a few for 15k. I somehow doubt its going to happen though.
I am not sure how inference constrained we are, btw. As an enterprise customer, I have zero problems with 429s and capacity from google or aws. All large volume inference jobs - so customer journey bots that help our company make money - run on dirt cheap models kept on short leashes in custom harnesses. Message delivery costs us 10x more than inference (with meta price hikes of October). All long-horizon jobs such as coding are probably somewhat inference constrained, but only to the point that sometimes the devs and corporate users with their own agents wait a bit for something to be completed, but nobody is noticing it. Sure, one notices a difference between /fast mode and normal while building software, but nobody really has a reason to care much, /fast modes are a pure luxury thing outside of incident remediation. I don't see what would Anthropic actually do if they had 10x the compute or 100x the compute they are planning for. Surely, some new business models, trolling mathematicians at a larger scale maybe?
Regulators are asleep at the wheel in case you hadn't noticed
Just wait until WSJ discovers the existence of a form called Intel Capital.
You don't say!
This is such BS it's just insane.
Its big customers buy ~100x more GPUs and need even more.
Startups need not apply.
"there are no dark gpus"
Surely this is Nvidia deploying excess capital by acquiring equity in high growth companies at significant discounts (factor in that a major portion of the investment comes back to them against their high margin products). This isn't a new business concept and is generally accepted as smart business? Not some breaking news conspiracy?
> CFO and acting CEO, Colette Kress ... pushed for a reduction in circular financing agreements,
Reducing circular financing agreements seems like ... a good idea?
> in response to which Huang allegedly lay into Kress, calling her a "deer in the headlights,"
From WSJ below. Seems clear they went too far. But not clear Kress can navigate this.
Over the course of the meeting, he proceeded to tear into the woman who is now taking over for him as Nvidia CEO.
Colette Kress was "a deer in the headlights," he said, interrupting her presentation, according to a person familiar with the comments.
He had summoned Kress and his senior finance team to diagnose a ballooning problem: Nvidia was in talks to provide billions of dollars of guarantees to companies that couldn't afford its chips. That included deals led by Huang's son-in-law, Nico Caprez, who had been offering upstart cloud providers and data-center developers financing in the hopes of turning them into long-term customers.
Huang had launched a dealmaking spree and was now starting to question whether it had gone too far, according to people familiar with the matter.
Kress was a "reporting CFO," not someone who could help him define a strategy or make decisions, Huang said during the August meeting.
this is the new off balance sheet transaction
I’m so ready this time, CFO at the helm
This isn't responsive to GP's remarks.
> a major portion of the investment comes back to them
1. circular financing agreements
2. see 1
You’ve now edited the comment I replied to (originally it was just the quote), but it is still not responsive to the OP; nor is your new comment responsive to my earlier criticism.
Well that's actually a hopeful sign for the future. I was a bit worried hearing she'd been conservative about investments in the past... but if the conservatism was about vaguely fraudulent circular financing deals we'll all be better off.
Spot on. Maybe that implies some correction of some sort. Especially to their stock and to the beneficiaries of this circular financing.
I also feel this is a good thing. Looks like the elephants in the room are being addressed.
> (factor in that a major portion of the investment comes back to them against their high margin products)
One problem is that there isn't one number that indicates what percentage of Nvidia's equity investments come back to it in the form of chip purchases. In some cases, it appears it's 100%; in others, it has been suggested that every $1 invested produces >$3 in revenue. $1 invested for $1 in revenue versus $1 invested for $3 in revenue are really different outcomes.
There are also the questions of the revenue and revenue quality of the companies Nvidia has invested in, how much debt they've taken on, what sort of backstops/guarantees Nvidia has given them, etc.
> One problem is that there isn't one number that indicates what percentage of Nvidia's equity investments come back to it in the form of chip purchases.
And why couldn't a single number be calculated for this? They know their portfolio companies, their investment amounts, and the portfolio company purchases of their products.
> There are also the questions of the revenue and revenue quality of the companies Nvidia has invested in, how much debt they've taken on, what sort of backstops/guarantees Nvidia has given them, etc.
These are generally good things to look at for all corporate investments.
The main takeaway is that Nvidia investing in their own customers isn't inherently a bad thing. Investing in a poorly performing company is a bad thing.
> And why couldn't a single number be calculated for this? They know their portfolio companies, their investment amounts, and the portfolio company purchases of their products.
They probably could calculate it but they're not required to and, if we're being honest, they probably don't have an incentive to.
> These are generally good things to look at for all corporate investments.
They are, but the issue with Nvidia is that the web of customer relationships, equity investments, financing, backstops, etc. is very hard to untangle. Not every counterparty is publicly-traded, and even when they are, not every aspect of their business that would go into this sort of due diligence is necessarily required to be reported.
> The main takeaway is that Nvidia investing in their own customers isn't inherently a bad thing. Investing in a poorly performing company is a bad thing.
The question is whether or not Nvidia is even capable of adequately performing due diligence on all the customers it has invested in, financed or backstopped, or modeled the macro effects of its investments.
Sounds like a terrific investment if you get $3 Revenue plus equity for $1 invested.
What seems to be the problem?
Because not every deal reported seems to have that math.
Some of the deals look really good on paper, and others look like $1 in equity investment produces $1 in revenue.
You also need to factor in whatever non-equity financing Nvidia extends to these buyers, how much debt they've raised from lenders and what backstops Nvidia has committed to.
Investing a bunch of money in a company that is heavily indebted, and committing yourself to buying significant amounts of any unsold compute might not be so smart, especially if that company has only one or two big customers.
So this is the real problem with Nvidia: it has all these deals, some of which might be totally sensible and others that might be WTF, and it's really hard for investors to figure out what the "portfolio" looks like overall.
They have been reinvesting all their inflated profits into more of these deals, at increasingly uneconomic valuations. That already makes it Ponzi-like.
It doesn't make recurring revenue, either. Not without fresh cash infusions into all the startups.
Largely means P/E is a useless metric here, investors don't get to see their short term net profits, and even if they do see it, those don't extrapolate to future years/decades.
We've got a lot of investors out there not thinking about this with a level head, they just see %%% growth and a "low" P/E.
What...really?
"Allegedly" hahahahahahahahahahahaaaaa aaaaahahahahahahahahahahaha
BigAI has also been artificially boosting demand for and perception of acceptance by paying for lots of shills in socmedia. astroturfing. I can even think of 3 multi-$MM rewards made in the space to pro-AI boosters (OpenClaw guy, Bun guy, Omarchy/DHH). arguably a 4th if count Linus too, via the Linux Foundation sponsorship
Well how else could OpenAI who is basically synonymous with AI to laymen have spent nearly $6B in 2025 on marketing? 7 out of 10 YT videos I watch are also sponsored by some random AI company, which to me is just insane: how does every AI startup have unlimited funds?
What a dumb take
If true then I think it is time to put all responsible folks at NVIDIA in jail. This is collusion to the maximum, if it can be proven in court. I don't think they should be able to just pay a fine - there has to be mandatory jail time for people who build a cartel. Even in the USA a cartel should be forbidden - capitalism as the main religion in the USA, mandates that free market competition leads to lower prices. This clearly can not work if big corporations decide to milk the market. These things have increased insanely when the orange king and his cronies seized power.
This is delusional. The startups needed GPUs and nvda had the ones for AI. How is it even engineered they weren't forcing them to buy peanuts they didn't need but something they needed.
Is this “engineering scarcity” or just seeding demand for their product, which is something every company does?
As another example, when you apply to YC you can get some free AWS credits. Then if your startup is successful you’ll probably be deep into the AWS ecosystem.
If certain ec2 instance types are rare as they have been lately, is that AWS “engineering scarcity”? Or just finding new customers?
Guys, I have to say: I feel like I've found today's two-minute hate thread.
Has Nvidia done sketchy shit in the past (and very recent past)? Zero argument.
But as I follow this thread, I am seeing more and more pile-on that blames Nvidia for an increasingly staggering series of things that is starting to get out there.
I wonder if I’m noticing the odd timing of everything too much, or whether there’s an effort to air as much of Nvidia’s dirty laundry as possible.
No idea to what end, Nvidia stock collapsing would probably be enough to bring on the AI crash with no hope of gradual rebalancing (like the drop we saw a week ago) and most likely take the US economy with it.
It’s not like anyone will get cheap RAM suddenly if that happens, more like lots of people will lose their livelihoods.
When any trend, business, candidate, politician, etc. starts slipping, there is a tendency to pile on quickly. Not just “kicking when down”, but to unload so much other baggage quickly so it becomes just an undifferentiated “painful period” with no one (well perhaps one Judas goat, or actually Judas here) to blame, or to be held accountable for any individual business action. “Wow, that was a crazy time, we were all so silly. Let’s move on quickly.”
A product I work on had a big and quite public bug bounty payout recently. That led to an upswing in bug bounties reports. That's not odd timing, that's independent (human) agents sensing something as being valuable of their time poking at it.
I dunno, Nvidia's dirty laundry (dude's inability to keep his whatsit in his pants) seems like exactly the kind of thing that is inevitable to come out (oh god, that pun wasn't intentional).
No need for conspiracy here, personal weakness does in so many high flyers.
But I agree that the tech cat is out of the tech bag, and there's no going back: Nvidia doesn't make their own chips, they are almost fully reliant on other foundries.
Demand shows zero sign of softening - not since crypto, and AI just keeps it going.
Today, 5 of the busiest airports in US were ground to a halt for 5 hours. Why? the air traffic control system failed. Why did it fail? It is a system running 50 year old software. Why hasn't it been modernized? Because it is extremely expensive and risky to tinker with such a complex system.
I have no doubt that before the end of this decade, Claude could re-write the air traffic controller software, formally verify it, test it exhaustively, deploy it, and monitor it in operation. It might be able to do it now.
This is not a bubble. Very soon, it will be criminal negligence to run critical infrastructure on insecure, decades old software. Anthropics, or others like them, will be central to the functioning of the computer systems on which modern life relies.
So far the companies that did it had massive AI induced failures (Amazon just this year).
AI is absolutely a multiplier but people too eagerly try to dismiss existing good practices with "just let AI vibe code it for a week, surely it will be great"
It's delusional
And yet if you work deep with Opus5.5, it makes many mistakes all of the time. Of course, so do interns. The issue here is that peer reviewing by another instance of Opus5.5, is like having an identical human look at your own code. It's just not a true, real, peer review.
Now there are loads of fixes for that. But human peer review takes the super-fast out of using AI. You can review faster than write and test, that's for sure, but the best peer reviewing comes from people actually working in the code base, writing real code with their teammates.
Peer reviews by people not working on the code base, are far, far less viable. You'll catch big mistakes, but not mistakes predicated upon a code base you never ever touch or read in depth.
So you're left with lots of fixes we can suggest. I often use another model, eg, fable reviews once in a while on opus work, or I might use chatgpt for an alternative look. But here's the skinny...
Lots of devs do nothing of the sort.
And all current AI does seem to have similar blind spots.
I'm confident opus5.5 could easily re-write the entire codebase. Really, consider its age it cannot be that big of an existing code base. However, are there any devs alive working on that code base?
And do those devs work actively, or instead do they have fears about changing each and every byte? Do those devs understand the difference between 'that was a dumb way to write that' and 'oh, that's actually an oddity so that planes won't smash into each other in the sky'.
So:
* true human review isn't possible unless humans are working actively, and know the codebase
* few do any code review, even different model code review
* no one likely knows why design decisions were made in the software, so the biggest challenge is why was everything done precisely the way it was, which means the current biggest challenge is a series of ramp ups where the coders need to very much know ever aspect of traffic control in depth, then look at the codebase...
Because opus5.5 is good, but context windows aren't going to hold that.
I stand by this firmly, AI=awesome, no devs working alongside to have skill to review=insane.
Silicon Valley grifters, the whole industry is a Barnum Bailey freak show scam; Ed Zitron is 100% right.
Possibly Apple is the least sleezy, by defacto of being late to the SI scam party.
> Ed Zitron
He's been claiming what this article is claiming for months now. It's sad that most media outlets still pretend to not know who he is.
Apple was never really at the party giving OpenAI zero and giving Google a $1 billion refund on the default search engine position fee means that you’re not exactly at the party. But Apple did pay more for memory to put into your devices. But in the case of Apple, the end users paid for it.
The companies that don’t have billions of dollars but put billions of dollars into those data centers and paid the price in debt will be the ones that will be in trouble, particularly if they did nearly everything on credit, some of the companies spent a huge amount on CapEx. If the bubble were to burst now look out below.