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.
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.
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?
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 (1) they could not sell that quantity of GPUs at market prices ordinarily and (2) they were betting that VC hype and the perception of high demand generated from doing so would be worth more than selling GPUs normally.
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 and $20 billion for the next 3 years, and $10 billion for the last 6 years.
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 agreements depend on Nvidia maintaining sales, market share, and capacity TSMC/etc... If they run into trouble on any of those fronts, their revenue and assets could take a hit from multiple directions.
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.
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?
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.
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.
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.
>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.
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.
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.
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)
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
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)
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.
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.
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.
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.
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.
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 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.
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.
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.
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.
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.
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.
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.
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?
> (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.
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.
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
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.
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.
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.
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.
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?
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.
They're just another rank monopolist. We should celebrate their fall, maybe there will be room for some real competition.
https://www.theguardian.com/technology/2025/dec/28/nvidia-in...
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?
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.)
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 agreements depend on Nvidia maintaining sales, market share, and capacity TSMC/etc... If they run into trouble on any of those fronts, their revenue and assets could take a hit from multiple directions.
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.
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.
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.
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.
How much % of car loans are vendor financed?
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.
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.
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.
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.
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.
:D
I can likely reveal a whole lot of your biases and upend this phony notion we can't falsify over screen that you're pure in your neutrality
Trying to deny your real biological existence and inherent character flaws that come with is vanity
A neutral person would not have an opinion on negative or positive tone.
See Futurama for a comedic dramatization of the logic of the neutral character
"Banks allegedly engineered inflation by funding[1] consumer's spending"
[1] aka. credit cards
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?
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
Possibly Apple is the least sleezy, by defacto of being late to the SI scam party.
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.
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.
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.
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.
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.
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.
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.
Status 403 Trace ID 0HNQ10T1IEVBA:000001B6
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.
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.
What seems to be the problem?
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,"
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.
I’m so ready this time, CFO at the helm
1. circular financing agreements
2. see 1
I also feel this is a good thing. Looks like the elephants in the room are being addressed.
Here’s the original article: https://www.wsj.com/tech/jensen-huang-colette-kress-nvidia-c...?
The more often you do it, and the greater the margin becomes due to squeeze, the dumber it is.
I imagine the shortsellers and put option holders like that.
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.
Seems like a great way to cash out at the top
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?