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NVIDIA frenemy relation with OpenAI and Oracle

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Re: NVIDIA frenemy relation with OpenAI and Oracle

#101

Post by mr_toad »

chasd00 wrote: post #73
mr_toad wrote: post #44

Earlier quoted context omitted.

Nvidia could have invested elsewhere, but they’re doubling down on AI. Their shares have been tanking for a month, even after a very good earnings report, so perhaps the market seeks a little more diversity?

this isn't an investing site but Coreweave is what I watch. All those freaking datacenters have to get built, come online, and work for all the promises to come true. Coreweave is already in a bit of a picklye, I feel like they are the first domino. /not an investing/finance/anything to do with money expert.

Coreweave’s price has been sliding since June. Odd for a bubble to behave like this.

Re: NVIDIA frenemy relation with OpenAI and Oracle

#102

Post by echelon »

cyanydeez wrote: post #52
mvkel wrote: post #16

Earlier quoted context omitted.

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.

Its crypto wash trading.

Nvidia is buying customers that will likely have increasing need for Nvidia. Those investment dollars will be spent on Nvidia. Future dollars will be spent on Nvidia.

Second order effects are that everyone serviced by AI today will need even more AI tomorrow. Nvidia is there for that. They're increasing AI proliferation.

By increasing the number of engineers, dollars, watts spent on GPU, Nvidia grows its market.

The added benefit here is that Nvidia gets to share in the upside if any of these companies succeed in their goals.

It's as if Microsoft had Azure back before the doctom boom and took investments in Google, Amazon, and Facebook in exchange for hosting them. (And maybe a few misfires, like WebVan.)

This is really smart chess play.

Re: NVIDIA frenemy relation with OpenAI and Oracle

#103

Post by rayiner »

gchadwick wrote: post #15

> 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 compani…

Is Groq different from Grok?

Re: NVIDIA frenemy relation with OpenAI and Oracle

#104

Post by danielmarkbruce »

arcticbull wrote: post #80
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.

Burrys critique is that the Nvidia funding deals have them investing money in a company and getting both stock in that company and their own money back to buy the chips. They then book the chip sales in revenue but they don’t show the investment as a cost, since investments are treated separately from an accounting perspective. So it looks like they’re growing revenue organically at no cost, while that doesn’t seem l…

The truth is you can't properly account for these transactions. If they are making legitimate equity investments (ie, that an independent investor would reasonably make) it's all fine. If they are investments that don't hold water, it's fraud.

It's not that different to any type of vendor financing. Vendor financing is legit, if done legitimately.

Re: NVIDIA frenemy relation with OpenAI and Oracle

#105

Post by [deleted] »

throw234678 wrote: post #20

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 ac…

[deleted]

Re: NVIDIA frenemy relation with OpenAI and Oracle

#106

Post by fngjdflmdflg »

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.

Yeah, I saw this critique show up a few months ago and now I'm seeing it everywhere, even in major financial news sites like Bloomberg.[0] It's certainly worth discussing, but people are taking it as a gotcha to prove the AI boom is fake. However, all the AI companies have to buy from Nvidia anyway. And Nvidia has tons of cash, in fact it has 4x the cash on hand now than it did in 2023, despite all the investments.[1] So yes, if they think the AI market will grow then of course they will buy into it. If all of Nvidia's deals went bad, their stock would plummet, but not because they lost a few tens of billions, rather because that would mean the AI market is going down in general. There is a great counterexample to the "AI is propped up by circular funding" argument in Google, which uses its own TPUs and builds its own AI, and integrates it into it's own end-user products, no circular deals needed. If AI is propped up by anything it is investors and companies thinking it will give them a huge return. Circular deals are a result of that: cash is going everywhere into that market, it's that simple. The AI boom may be a bubble, but not due to circular deals in particular.

[0] https://www.bloomberg.com/news/features/2025-10-07/openai-s-...

[1] https://www.cnbc.com/2025/12/04/nvidia-has-a-cash-problem-to... -- Actually "Cash and short-term investments", not sure what is included in that, but I don't think it includes these major deals.

Re: NVIDIA frenemy relation with OpenAI and Oracle

#107

Post by danvayn »

arcticbull wrote: post #80
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.

Burrys critique is that the Nvidia funding deals have them investing money in a company and getting both stock in that company and their own money back to buy the chips. They then book the chip sales in revenue but they don’t show the investment as a cost, since investments are treated separately from an accounting perspective. So it looks like they’re growing revenue organically at no cost, while that doesn’t seem l…

Burry's critique is even more general than that when it comes to tech companies doing accounting fraud. It's his argument as to why "the market doesn't make sense" and his bets have failed -- which is why I'm not sure anyone would summarize it as "betting against AI growth translating into real profits as a whole"

Re: NVIDIA frenemy relation with OpenAI and Oracle

#108

Post by grandmczeb »

rayiner wrote: post #103
gchadwick wrote: post #15

> 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 compani…

Is Groq different from Grok?

They're unrelated. Groq = chip company, Grok = model by x.ai.

Re: NVIDIA frenemy relation with OpenAI and Oracle

#109

Post by wmf »

twoodfin wrote: post #69
IshKebab wrote: post #48

> 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. > > Looking at all those pieces, I feel Oracle should seriously look into buying Groq. I don't see why. Graphcore bet on SRAM and that backfired because unless you go for insane wafer scale integrat…

Forget about DRAM vs. SRAM or whatever: How does a cheaper source of non-Nvidia GPUs help Oracle? They’re not training models or even directly in the inference business. Their pitch is cloud infra for AI, and today that means CUDA & Nvidia or you’re severely limiting your addressable market.

Yeah, some customer would have to commit to renting the chips before Oracle would buy them.

Re: NVIDIA frenemy relation with OpenAI and Oracle

#110

Post by next_xibalba »

danielmarkbruce wrote: post #100
next_xibalba wrote: post #86

Earlier quoted context omitted.

> Net Income and Operating Cash Flow are not the same thing This is the second article that gained a lot of traction on HN in the last few months with similar fundamental errors. The previous one was similarly written by someone with a dev background where they didn't understand the difference between gross margins, operating profit, and net income–concepts which were the basis for their analysis. I wonder with this…

A confident yet clueless swe? I don't believe you.

Don't get me wrong, I love SWEs, devs, DSs, etc. and I think they do tend to be much smarter than the average. But, in my experience, they also exhibit higher than average hubris.
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