91–100 of 197 posts
This bubble bursting will make us all poor
Now I've got the feeling they don't have huge amounts of GPUs sitting in their DCs, but rented for Opex. In case the bubble pops they might get it at discount as CapEx (like Amazon did with dark fiber after the dotcom bubble).
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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…
It's not circular! And if it is, it's not a problem! And if it's a problem, it doesn't affect me!
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.
Yandex, not nebius. Surprised how the world gets on kgb again and again, and again
Didn't they move to escape that world?
Certainly looks like they were trying to get out, and were rich enough to actually pull it off (that can't have been cheap). Also they deserve some serious kudos for actually trying to protect them.
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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.
For anyone else wondering, TAM seems to be ‘total addressable market’ if my searching is accurate.
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>> the volume is orders of magnitude worse than what caused the 2007ff global financial crisis. Nobody lives in GPUs and what was the ratio of equity/debt for the toxic assets in 2007?
It looks more similar to the 1929 crash to me, where "too big to fail" blue chip stocks were overinvested and overvalued, and the value adjustments rippled through the rest of the economy. If NVIDIA does get a meaningful value adjustment downwards, it'll probably survive, but it'll impact the S&P500. People will need to sell off other stocks to cover the losses, etc. etc.
Yup. Add to that the decade worth of ZIRP following the 2007ff crash and Covid... all that money has to exit the system again eventually.
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…
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.
But how do you even measure the ROI of tokens? I don’t think it’s possible, tokens aren’t fungible. You can spend millions on tokens that don’t contribute one bit to the company revenue, then spend $10 that will actually result in useful things
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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 you think it's a problem, short NV or buy competitors who are not doing this or don't buy their share at all. If you're right, they'll get burned soon enough and it's none of your business!