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NVIDIA frenemy relation with OpenAI and Oracle

philippeoger.com

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Re: NVIDIA frenemy relation with OpenAI and Oracle

#11

Post by shadowgovt »

strangescript wrote: post #7

Its so wild to me that people that should know better pretend that this kind of stuff doesn't happen in every industry.

Pull our POV back far enough, and isn't "circular funding" just "The economy?"

Money circulates; it's what it does. The real question is to what extent circulation among a small group of firms is either collusion in disguise (i.e. decisionmaking by only one actual entity falsely measured as multiple independent entities) or a fragile ecosystem masquerading as a healthy one (i.e. an "island economy" where things look great in the current status quo, but the moment the fish go away the entire cycle instantly collapses).

Re: NVIDIA frenemy relation with OpenAI and Oracle

#14

Post by londons_explore »

myhf wrote: post #5
kart23 wrote: post #3

The critiques of 'circular funding' don't really make sense to me. If you invest 20 billion and you get back 20 billion, your profit is the same. Sure your revenues look higher but investors have access to all that information and should be taking that into account, just like all the other financial data. Michael Burry is betting against AI growth translating into real profits as a whole, not the circular funding.

It's certainly a problem when circular investment structures are used to get around legal limits on the amount of leverage or fractional reserve, or to dodge taxes from bringing offshore funds onshore.

Plenty of sneaky ways of using different accounting years offshore to push taxes forward indefinitely too, since the profit is never present at the year end.

Re: NVIDIA frenemy relation with OpenAI and Oracle

#15

Post by gchadwick »

> However, Groq’s architecture relies on SRAM (Static RAM). Since SRAM is typically built in logic fabs (like TSMC) alongside the processors themselves, it theoretically shouldn't face the same supply chain crunch as HBM.

It's true SRAM comes with your logic, you get a TSMC N3 (or N6 or whatever) wafer, you got SRAM. Unfortunately SRAM just doesn't have the capacity you have to augment with DRAM which you see companies like D-Matrix and Cerebras doing. Perhaps you can use cheaper/more available LPDDR or GDDR (Nvidia have done this themselves with Rubin CPX) but that also has supply issues.

Note it's not really about parameter storage (which you can amortize over multiple users) it's KV cache storage which gets you and that scales with the user count.

Now Groq does appear to be going for a pure SRAM play but if the easily available pure SRAM thing comes at some multiple of the capital cost of the DRAM thing it's not a simple escape hatch from DRAM availability.

Re: NVIDIA frenemy relation with OpenAI and Oracle

#16

Post by mvkel »

kart23 wrote: post #3

The critiques of 'circular funding' don't really make sense to me. If you invest 20 billion and you get back 20 billion, your profit is the same. Sure your revenues look higher but investors have access to all that information and should be taking that into account, just like all the other financial data. Michael Burry is betting against AI growth translating into real profits as a whole, not the circular funding.

The problem is that stocks are often valued and traded on revenue growth, not profit[0] So circular funding generates stock price bumps when, as you said, there's no inherent value underneath. Creates a recipe for a crash.

[0] consider pagerduty, incredibly profitable with little revenue growth. Trading at 1.5X revenue, where high revenue growth, unprofitable companies are trading at 10X revenue.

Re: NVIDIA frenemy relation with OpenAI and Oracle

#17

Post by pinkmuffinere »

fwip wrote: post #13

- **The Cash Flow Mystery**: ... - **The Inventory Balloon**: ... - **The "Paper" Chase**: ... More AI slop.

I agree it's poorly written, but I'm _much_ more interested in whether it is correct, or incorrect. Do you believe it is incorrect?

Re: NVIDIA frenemy relation with OpenAI and Oracle

#18

Post by Jare »

kart23 wrote: post #3

The critiques of 'circular funding' don't really make sense to me. If you invest 20 billion and you get back 20 billion, your profit is the same. Sure your revenues look higher but investors have access to all that information and should be taking that into account, just like all the other financial data. Michael Burry is betting against AI growth translating into real profits as a whole, not the circular funding.

Just because it's legal and in the open doesn't mean it's sound or not creating perverse incentives. Investors that "should be taking that into account" probably are, and hoping that they come out on top when the bubble bursts. That means pain for many people. Those are very valid reasons to point the finger and criticize.

Re: NVIDIA frenemy relation with OpenAI and Oracle

#19

Post by [deleted] »

kart23 wrote: post #3

The critiques of 'circular funding' don't really make sense to me. If you invest 20 billion and you get back 20 billion, your profit is the same. Sure your revenues look higher but investors have access to all that information and should be taking that into account, just like all the other financial data. Michael Burry is betting against AI growth translating into real profits as a whole, not the circular funding.

[deleted]

Re: NVIDIA frenemy relation with OpenAI and Oracle

#20

Post by throw234678 »

This post is written with its intellectual fly open. I'm not sure whether it was partly AI-generated, or whether the author has spent so much time ingesting AI-generated content that the tells have rubbed off, but this article has:

- Strange paragraph-lists with bolded first words. e.g. "The Cash Flow Mystery"

- The 'It's not just X; it's Y' meme: "Buying Groq wouldn't just [...], it could give them a chip that is actually [...]. It’s a supply chain hedge."

Tells like:

- "My personal read? NVIDIA is [...]"

- "[...]. Now I'm looking at Groq, [...]"

However, even if these parts were AI generated, it's simultaneously riddled with typos and weird phrases:

- "it looks like they are squeezing each other [sic] balls."

- Stylization of OpenAI as 'Openai'.

Not sure what to make of this low-quality prose.

Even if the conclusion is broadly correct, that doesn't mean the reasoning used to get there is consistent.

I do, at least, appreciate that the author was honest up-front with respect to use of Gemini and other AI tools.

Final grade: D+.

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