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

51–60 of 197 posts

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

#51

Post by brookst »

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…

This is not remotely new. When I worked at Intel ~20 years ago, Intel Capital invested in startups that would buy Intel hardware. Some of them succeeded, some did not.

But "invest in companies that may grow your own TAM" is an ancient strategy. Sometimes it works, sometimes it doesn't (like any strategy).

I'm not disagreeing with you, just saying it's business as usual.

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

#52

Post by brookst »

484994949595 wrote: post #23
wmf wrote: post #18

Earlier quoted context omitted.

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

all money moves in circles, it's just a question of number of stops.

think about stuff like pork barrel funding for aerospace, which props up jobs, which generates funding for political campaigns that perpetuate pork barrel funding.

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

#53

Post by brookst »

wmf wrote: post #19
uncivilized wrote: post #15

Earlier quoted context omitted.

You're saying people tell themselves at the top that the run can continue for another few years?

That's how every bubble works.

that's what Bezos was saying at Amazon during the dot com bubble?

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

#55

Post by georgemcbay »

brookst wrote: post #51
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…

This is not remotely new. When I worked at Intel ~20 years ago, Intel Capital invested in startups that would buy Intel hardware. Some of them succeeded, some did not. But "invest in companies that may grow your own TAM" is an ancient strategy. Sometimes it works, sometimes it doesn't (like any strategy). I'm not disagreeing with you, just saying it's business as usual.

I don't think its really the novelty of the situation that has people worried, its the scale of it and how that scale impacts the speed at which billions of dollars of market value could poof away when/if the music stops.

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

#56

Post by angulardragon03 »

brikym wrote: post #35
dainiusse wrote: post #12

Yandex, not nebius. Surprised how the world gets on kgb again and again, and again

Didn't they move to escape that world?

Yandex’s parent holding company was Dutch, and Nebius is now the same. A lot of their employees were effectively transferred between the two. Nebius is basically still just Yandex, just rebranded and legally a different entity.

It’s also by many accounts a bit of a weird company to work for, but they can afford to pay above-market for many roles.

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

#57

Post by Night_Thastus »

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.

IMO, it can be profitable - but only at the business level. A business with many software devs can pay the steep price for access.

For almost everything else, the answer is no. No one else would pay the real costs to run them.

It'll require the whole industry to shrink down massively compared to what we're seeing now - down to a profitable (and much smaller) core.

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

#58

Post by 27183 »

Mistletoe wrote: post #30
rapidfl wrote: post #21

Earlier quoted context omitted.

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.

  0. Pour money on the fire
  1. AI somehow becomes AGI because money implies "emergence" I guess?
  2. Profit somehow?

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

#59

Post by bwfan123 »

Night_Thastus wrote: post #57
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.

IMO, it can be profitable - but only at the business level. A business with many software devs can pay the steep price for access. For almost everything else, the answer is no. No one else would pay the real costs to run them. It'll require the whole industry to shrink down massively compared to what we're seeing now - down to a profitable (and much smaller) core.

> For almost everything else, the answer is no. No one else would pay the real costs to run them. It'll require the whole industry to shrink down massively compared to what we're seeing now - down to a profitable (and much smaller) core.

If there is any data to support this, please share.

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

#60

Post by yalogin »

I don’t know if the circular financing is a problem. NVIDIA is the best my name in town, any company has to spend on NVIDIA assets for their compute. Now that makes NVIDIA rich and so they don’t know what to do with their money. They are just propping up companies they find interesting
Post reply on HN