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Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee

reuters.com

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Re: Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee

#91
post #52

Earlier quoted context omitted.

It's a problem when there's 10x leverage AND the underlying asset massively deprecates in value. Neither of those look likely yet.

You don’t think GPUs depreciate massively in value? I think they are written off to zero in less than 5 years. And if you look at the ARR of the companies “buying” them, I think we can see there’s some significant leverage going on.

H100, almost a five year old GPU, costs more to buy used now than it was to buy brand new at release.

Of course, everything has a lifespan.

Consider a simple arithmetic problem, and this mania will start making sense.

An H100 costs approximately 30k. You can run a decent latest open model on it at 1000 tokens per second batched. Cost on open router is 4$ per 1m tokens.

That's about 120k revenue per year if there's demand. So far, there's unlimited demand.

You, as one person, can likely not make the logistics of this work. But this really works with the economies of scale.

Now, because of that everyone wants to buy GPUs and we don't have enough.

The math works much better with a newer GPU that produces more tokens per second and consumes less energy to do so, even if it costs double. So why would anyone buy an old one? Because demand is orders of magnitude more than supply.

Re: Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee

#92
post #28

Earlier quoted context omitted.

The loans will just take longer to repay. There is a market for Anthropic & OpenAI, it just likely doesn't have the 200B profit each year required for the maths to make sense. If shit hits the fan, the companies collapse, then Nvidia gets their money from the investors anyways.

I'm hoping when the shit hits the fan, you can get a sick GPU for cheap.

I think a more likely scenario is that GPU time in the cloud will be very cheap. If LLM use/profitability doesn't follow the expected path, new deep learning applications could be heavily subsidised.

Re: Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee

#93

This is probably a lot more related to the fact they want to make GPUs an asset class. Nvidia is banking on the fact there will be an entire market that will guarantee whatever anyone needs.

A rapidly depreciating asset class of something that loses almost all its value in a few years and can't be repaired?

I’m just the messenger.

Re: Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee

#94
post #52

Earlier quoted context omitted.

No, I get this; it is not a problem. It becomes one when they cannot pay back this financing, in the event that they cannot build a sustainable business, which they cannot, because the capital cycle leads to overinvestment, meaning the financiers cannot meet their returns. https://s-1.vercel.app/posts/the-capital-cycle-theory/

It's a problem when there's 10x leverage AND the underlying asset massively deprecates in value. Neither of those look likely yet.

Taking a multi-decade perspective, I wonder if our general analysis is focused too much on the initial wave of LLM tech and current gen GPUs.

Owning a massive data center connected to water and power and network that can be targeted or converted to developing needs seems like a decent problem to have for the big cloud companies. We have compute hungry companies and media, in addition to cryptocurrencies etc, and we’ll have more of them in 2045.

I don’t know if I’m underestimating how purpose-built these datacenters are, or overestimating the accountants in the corporate vehicles building them, but the broader situation doesn’t seem as fragile as 1929 or 2008 (even if the businesses are overvalued and LLMs fall totally out of fashion).

Re: Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee

#96

What would happen to Nvidia, Anthropic, OpenAI, if tomorrow someone released an open weights model on HuggingFace that matched performance and accuracy of Opus 5 running locally on an RTX 5070? That won’t happen tomorrow, but it will likely happen someday… what’s the plan beyond “don’t be the one holding the bags?”

There’s no reason to assume frontier-level intelligence eventually collapses all the way onto a midrange consumer GPU. In fact, there are quite a few reasons not to assume that (information-theoretic constraints, etc).

We could very well reach a point where models don't get better anymore, or where consumer models are good enough for 95% of the use-cases.

Re: Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee

#97
post #26

Nvidia is turning into a savings and loan company that happens to design computer chips on the side. What could possibly go wrong.

Wait until you hear about how airlines work, you'll start babbling about the rewards-points bubble

Re: Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee

#98
post #71

Earlier quoted context omitted.

Great you brought that up, if you look at Apple's website you can now 'lease' a MacBook for 30-60$ per month :)

Yeah but the lease is provided by Klarna, not Apple.

Yeah but Apple pays Klarna to provide that service. Circular financing!

Re: Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee

#100

What would happen to Nvidia, Anthropic, OpenAI, if tomorrow someone released an open weights model on HuggingFace that matched performance and accuracy of Opus 5 running locally on an RTX 5070? That won’t happen tomorrow, but it will likely happen someday… what’s the plan beyond “don’t be the one holding the bags?”

"eventually" is actually a function of frontier model capabilities. You only get Qwen6-27B when you have Opus 7 producing extremely high quality tokens for them to train on. So the market for local models is always significantly behind the frontier, by definition.
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