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- Hacker News
- Anything that puts pressures on Nvidia's margins is going to have an outsized effect imo - margins declining from 75% to ~50% would undo all of its projected 2027 growth of 70%.
And what about the purported "AI frontier slowdown" - if frontier labs stop pushing better and better models, the main way to grow the pie is more users and that will eventually stop, too. Then providers would probably stop buying new hardware hand-over-fist and move to a slower depreciation-based replacement.
by sottol - Woah, better than Madoff! How can i give him money?by youoy
- nvidia invests $1 in AI company , datacenters with GPUs , AI company / datacenters buy $x worth of GPUs from NVIDIA , in a circleby alexdns
- Isn't vendor financing a common business practice to finance the cost of equipment? What makes it nefarious in this instance?by david-gpu
- I spent a few hours trying to run all the numbers myself from first principles (e.g. sum of all American salaries is 11.7T, plus international), to see what I could come up with.
What I came up with was Nvidia is maybe slightly overpriced currently, but a bad stock to buy or hold onto because the risk of it shrinking is significantly higher than the risk of it ever doubling again (and it trades at a tech/growth multiple). The case is far worse for Anthropic/OpenAI who, at current pricing, capture such a tiny slice of the pie it's hard to see how they will stay in business long term.
by zug_zug - Those $99, where do they come from?by wartywhoa23
- The future we want. Not the wasteful F-35 'Fat Amy' lemon future noone except the fighterjet mafia wants..by __patchbit__
- The Fed is printing them. Just like they print all other money.
From the article:
> I put in one, and a hundred comes back.”
> The figure was rhetorical, not a disclosed 100-times investment return.
There's a lot more words in there, but it doesn't seem to say anything else.
by OroPla - by brianpane
- Shush there! Don't ask any difficult questions!by rwmj
- are those 100$ in the room with us right nowby nicman23
- They are definitely in NVIDIA’s own rooms! It’s like, they invest $1 in AI companies, that pay back NVIDIA $100 for GPUs. If you draw the lines you will see something that looks a bit like an ellipse. Or maybe a boomerang path. Or like, a 2d sphere. A bit frustrating we don’t have a simpler word for such a shapeby dgellow
- So if they just had spare 100 billion they could make 10 trillion? Sounds reasonable and plausible right? Sadly market manipulation is not being prosecuted.by Ekaros
- After the downfall - it will be prosecutable. Of course before that we (simpletons) will have to pay for those companies to avoid “economic collapse”.
- I don't know about $100 back ... but their profit margin is $0.90 on the gpu that is bought with the $1 they lend / swap for equity + they get ongoing interest / equity stake.
Its a mighty fine deal for Nvidia
by blitzar - It is a bit circular but it also a growing real market. NVIDIA is accelerating the market and also making money. It is a smart strategy on their part.
We are not at the top of this trend yet so I do not see this as over investment.
I remember the criticism Microsoft got for investing in Facebook/Meta that gave them a whooping $15B valuation and getting 1.7% in 2007. Not all deals will turn out that prescient but a few will and make up for any duds. This is a real market.
by bhouston - sure, as long things go up, smart. when things no longer go up, they will take the whole economy down with them akin to the banking crisis in 2008 or the dotcom bubble before that (which both had far less circular incestuous activity going on) and will shamelessly act surprised after the fact.
as long as things go up people conveniently ignore the lessons from the past.
we are long overdue for a correction and given the fear mongering oligopoly shenanigans we must be very close.
by malthaus - Tell us how you know we are not at the top of this trend yet pleaseby ulfw
- > It is a smart strategy on their part.
No, it's a high risk gamble.
If the market grows enough they will win the bet, but if the market doesn't or we get a recession that dries up capital they will be holding the bag.
by BunsanSpace - I first read that "every $1T brings back $100", thinking, wow, is it THAT bad?
No, it's very unlikely at this point every $1 Nvidia invests brings back $100. Stating something like that is almost a red flag that things are overheating.
by vardump - They also said that theur hardware scales faster than Moore's law, when in reality it is way slower than Moore's law. Which I guess at least is a good thing for hyperscalars because it helps with their decision to write off their GPUs over a much longer period.
But still, it seems that billionaires are lying left and right. It isn't just Elon.
by stkdump - they're talking about book value, which is all the AAR garbage VC's throw around with their infinite TAMs and all the other clutches of bullshit capitalists need to put in their nests to make themselves feel like they arn't just very complex parasites.
So, in one aspect, like the Matrix, they're not lying: they litterally see that on the paper they're reading from.
But like in the matrix, they just need to be unplugged from the bullshit machine to recognize that this money doesn't exist in the real world.
Scientists, particularly the ones who get ragged on, you know, social scientists, are now well aware that no matter how well any given social goal works in the lab; no matter how much pscyhology they evaluate, depend on, etc, what matters is real world implementation.
Thier sheets of cash raining in from some future valuation simply do not exist in a vacuum, but they want to pretend it does.
So we're litterally watching capitalists look at their piece of meat inside the matrix, and telling us: they do not care that it doesn't actually exists, because on the Capitalism ledger, it feels like real meat.
by cyanydeez - Reminds me of the kind of stuff Bernie Madoff said before he got bustedby nunez
- > The figure was rhetorical, not a disclosed 100-times investment return.
seems no one is reading the article..
- Its definitely consistent over the past several years.by nonethewiser
- >every $1 it invests brings back $100
That's great leverage.
As long as it really is true and continues to hold true for all the big players involved then things should be OK.
Though it does imply that there's got to be a long-term source of returns which is 100x richer than Nvidia is now, and that source is willing & able to give up 100x what Nvidia can afford to spend now, or where else is the return actually going to come from?
OTOH if the leverage turns out to be unsustainable, or never was quite as extreme as estimated, then adjustments will have to occur, whether that amounts to carefully planned compensation for any shortcomings, or more abrupt developments which relieve undue pressure.
by fuzzfactor - Every $1 they invest brings back $100 in their valuation maybe.by nerbert
- Where are those 99$ coming from? Who is actually paying this money? Because it seems like so far everybody is losing money with no reversal of this trend in sightby iammjm
- This month I spent $50 on OpenRouter credits. I find it very useful for coding assistance (not coding per se). It's $50 that I never spent before on this kind of service. That's what we call growth - it quite literally came out of nowhere.by neonstatic
- Inflated valuations, mostly.