Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

io-fund.com

Post reply on HN
Print view View original

21–30 of 197 posts

Re: Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

#21

Post by rapidfl »

KaoruAoiShiho wrote: post #4
aurareturn wrote: post #3

Why is it a big deal? Nvidia invested $2b into CoreWeave for 9% equity stake. CoreWeave is spending $35b in CapEx in 2026. Therefore, Nvidia's investment is only 5.7% of CoreWeave's single year CapEx. The other $32b is coming from other sources that isn't Nvidia. This is hardly circular. Nvidia invests in Neoclouds because it's a hedge against hyperscalers having too much power, ie designing and prioritizing their ow…

You're probably just responding to the headline but this person is an AI bull and isn't claiming it's a big deal, she's going into it and explaining it.

People are looking for the AI bear case - so this headline gotta work better. Its not a bad idea haha. More people suspect there is some circular shenanigans but want confirmation -- so maybe this is the best way to lure them in. Come as the bear, stay for the bull.

With just these 2 comments, now I'm really gonna read that article.

Re: Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

#22

Post by vb-8448 »

aurareturn wrote: post #3

Why is it a big deal? Nvidia invested $2b into CoreWeave for 9% equity stake. CoreWeave is spending $35b in CapEx in 2026. Therefore, Nvidia's investment is only 5.7% of CoreWeave's single year CapEx. The other $32b is coming from other sources that isn't Nvidia. This is hardly circular. Nvidia invests in Neoclouds because it's a hedge against hyperscalers having too much power, ie designing and prioritizing their ow…

My understanding is that it's not about the money itself but the model:

- you fund a new company and sign long terms contracts with it - this new company uses the money you gave it and a lot of debt (backed by long term contracts) to build datacenters and buy a lot of GPU - your figures look great

What happens when they run out of debt or funds? If they reach some kind of profitability it's not a big deal, but if not ...

EDIT

Forget to mention the buyback of unused capacity problem: what happens to your figures when you have to buy back tons of unused GPUs?

Re: Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

#23

Post by 484994949595 »

wmf wrote: post #18
bwfan123 wrote: post #10

Circular financing is a dead horse - dont beat it. Instead, what is more interesting could be: Is there a path to these builds becoming economically profitable ? Towards this, some metrics to watch are: 1) ROI per token per dollar 2) Enterprise token budgets. And at what point there is an overbuild relative to the token roi. Alternatively, pressure on token costs due to the open weights models etc.

These questions can't really be answered now because things are moving too fast. That may explain why people are latching on to things they can prove like circular financing even if those arguments are pretty weak.

if the money moves in circles the consequences of new money stopping when predicted profitability falls become a lot more dramatic

Re: Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

#24

Post by marcosdumay »

vb-8448 wrote: post #22
aurareturn wrote: post #3

Why is it a big deal? Nvidia invested $2b into CoreWeave for 9% equity stake. CoreWeave is spending $35b in CapEx in 2026. Therefore, Nvidia's investment is only 5.7% of CoreWeave's single year CapEx. The other $32b is coming from other sources that isn't Nvidia. This is hardly circular. Nvidia invests in Neoclouds because it's a hedge against hyperscalers having too much power, ie designing and prioritizing their ow…

My understanding is that it's not about the money itself but the model: - you fund a new company and sign long terms contracts with it - this new company uses the money you gave it and a lot of debt (backed by long term contracts) to build datacenters and buy a lot of GPU - your figures look great What happens when they run out of debt or funds? If they reach some kind of profitability it's not a big deal, but if not…

Yes, circular financing is not by itself a problem.

It being that size, lasting for that long, and the total lack of viable products created by it are the problem. Financing only adds leverage, that makes every loss or profit larger.

Re: Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

#25

Post by philipallstar »

vb-8448 wrote: post #22
aurareturn wrote: post #3

Why is it a big deal? Nvidia invested $2b into CoreWeave for 9% equity stake. CoreWeave is spending $35b in CapEx in 2026. Therefore, Nvidia's investment is only 5.7% of CoreWeave's single year CapEx. The other $32b is coming from other sources that isn't Nvidia. This is hardly circular. Nvidia invests in Neoclouds because it's a hedge against hyperscalers having too much power, ie designing and prioritizing their ow…

My understanding is that it's not about the money itself but the model: - you fund a new company and sign long terms contracts with it - this new company uses the money you gave it and a lot of debt (backed by long term contracts) to build datacenters and buy a lot of GPU - your figures look great What happens when they run out of debt or funds? If they reach some kind of profitability it's not a big deal, but if not…

> If they reach some kind of profitability it's not a big deal, but if not ...

What is the end of this sentence?

Re: Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

#26

Post by philipallstar »

lokar wrote: post #20
anon291 wrote: post #9

All financing is circular. This concern is beyond the pale contrived Financing is circular because creating a liability for one party (debt) creates an asset for another (the bank) off of which more debt can be secured A bank / financier sells trust and reassurance. They otherwise invent most money from thin air.

That’s not the point. The issue is that loaning/investing to a client so they can buy from you conflates your investments with your revenue. It may be fine, or not. It it has been a frequent type of manipulation to obfuscate the real accounting situation.

People are investing because if Nvidia are essentially buying shares with graphics cards then they're motivated to make this stuff work. If the invested in company's share price tanks, Nvidia loses out, and I imagine quite a few people are willing to win or lose alongside Nvidia.

Re: Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

#27

Post by InsideOutSanta »

philipallstar wrote: post #25
vb-8448 wrote: post #22

Earlier quoted context omitted.

My understanding is that it's not about the money itself but the model: - you fund a new company and sign long terms contracts with it - this new company uses the money you gave it and a lot of debt (backed by long term contracts) to build datacenters and buy a lot of GPU - your figures look great What happens when they run out of debt or funds? If they reach some kind of profitability it's not a big deal, but if not…

> If they reach some kind of profitability it's not a big deal, but if not ... What is the end of this sentence?

... then it is a big deal.

Re: Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

#28

Post by InsideOutSanta »

lokar wrote: post #20
anon291 wrote: post #9

All financing is circular. This concern is beyond the pale contrived Financing is circular because creating a liability for one party (debt) creates an asset for another (the bank) off of which more debt can be secured A bank / financier sells trust and reassurance. They otherwise invent most money from thin air.

That’s not the point. The issue is that loaning/investing to a client so they can buy from you conflates your investments with your revenue. It may be fine, or not. It it has been a frequent type of manipulation to obfuscate the real accounting situation.

Yeah, it's basically creating the illusion of demand and revenue. Lots of fraud in the past relied on companies "investing" into companies which then bought from the investor. I'm not sure to what degree this is happening now, though, and to what degree this is benign.

Re: Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

#29

Post by rwyinuse »

paradoxyl wrote: post #11
484994949595 wrote: post #2

[flagged]

[flagged]

In case you didn't notice, nobody has invaded Russia since Hitler. Instead it has been Russia invading other countries, using whatever imaginary threat as an excuse.

You may be right about WW3 in 2030, but based on the track record it's more likely that Russia will be the invader.

Re: Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

#30

Post by Mistletoe »

rapidfl wrote: post #21
KaoruAoiShiho wrote: post #4

Earlier quoted context omitted.

You're probably just responding to the headline but this person is an AI bull and isn't claiming it's a big deal, she's going into it and explaining it.

People are looking for the AI bear case - so this headline gotta work better. Its not a bad idea haha. More people suspect there is some circular shenanigans but want confirmation -- so maybe this is the best way to lure them in. Come as the bear, stay for the bull. With just these 2 comments, now I'm really gonna read that article.

Can someone even outline the AI bull case? I can’t fathom one at all.

https://isaiprofitable.com/

The only profitable company is the one running the scam.

Post reply on HN