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Nvidia projects $673B in sales as AI demand widens

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Re: Nvidia projects $673B in sales as AI demand widens

#81

Post by 0x457 »

consumer451 wrote: post #73

I have not been paying much attention to the whole circular deal thing that NVIDIA is supposedly doing. As in, they invest in their clients, who buy their products. Can anyone who actually understands finance please explain a couple things to me? 1. Are those accusations are true in a significant way, and are actually a bad thing? 2. This claimed $673B in sales, how much of it comes from NVIDIA's own money, invested…

What do you mean by “if true”? It’s a fact. It’s “only” bad if what they’re investing in goes south, because NVIDIA gets hit twice: it loses money on the investment and loses the GPU demand.

NVIDIA says it has invested nearly $50B in frontier labs. According to NVIDIA, “the AI labs for which NVIDIA expects to leverage its balance sheet should account for roughly one-quarter of NVIDIA’s business next year.”

To be clear, this doesn’t mean 1/4 of $673B is NVIDIA money.

Re: Nvidia projects $673B in sales as AI demand widens

#82

Post by 0x457 »

octaane wrote: post #77
consumer451 wrote: post #73

I have not been paying much attention to the whole circular deal thing that NVIDIA is supposedly doing. As in, they invest in their clients, who buy their products. Can anyone who actually understands finance please explain a couple things to me? 1. Are those accusations are true in a significant way, and are actually a bad thing? 2. This claimed $673B in sales, how much of it comes from NVIDIA's own money, invested…

If I give you 10 dollars, and then you put it in your pocket, and then you take it out again and give me 10 dollars back - no actual economic growth occurred. It's simply shuffling money around; the amount stays the same.

But it’s not just dollars changing hands. If I invest N dollars in your hot-dog business, and you use some of that capital to buy equipment from me, I get revenue from the sale, and I still own an investment in your business. If you succeed, that investment can also make me money.

Re: Nvidia projects $673B in sales as AI demand widens

#83

Post by zozbot234 »

minraws wrote: post #76
kemiller wrote: post #59

Earlier quoted context omitted.

Yeah, I think there's a tendency to underestimate how much demand is still gated behind cost constraints. The market for this is HUGE. The PC era, call it 1975-2005, was one of the greatest wealth creation events in history, was characterized by the cost of the underlying commodity dropping mercilessly for the whole time. Each time it did, the space of problem you could solve with a PC would increase, to the point th…

> how much demand is still gated behind cost constraints. The market for this is HUGE. I think this misses the actual limits here. The problem isn't demand it's, "how much people are willing to spend on it". Cheap AI has to be served on cheap compute, and if inference gets cheap enough to unlock massive usage numbers, by definition it also doesn't require anywhere near as much infrastructure per unit of demand. Take…

If AI compute is a transformative technology compared to industrialization (that's a huge "if", essentially positing a singularity-like outcome), that $1T-$2T/yr at current prices might be a tiny fraction of future GDP (real incomes), thus actually quite sustainable.

Re: Nvidia projects $673B in sales as AI demand widens

#84

Post by netcoyote »

ithkuil wrote: post #75
ttoinou wrote: post #67

Earlier quoted context omitted.

There is no paradox, simply (a/b) increasing tells you nothing about a nor b. Jevons only “destroys” the (wrong) intuition that total b would decrease

"paradox" is an overloaded term. Jevons paradox is a veridical paradox, which, as you said, means that it's a true statement that merely looks wrong because it is counterintuitive. I know that some people think that the word "paradox" should be only used to refer to antinomy paradoxes which are often called "true paradoxes" (such as "this sentence is false") which lead to a contradiction without requiring a flaw in r…

Thank you for a great comment; I learned two new words today!

Re: Nvidia projects $673B in sales as AI demand widens

#85

Post by sensanaty »

shuwix wrote: post #41
throwaway63467 wrote: post #21

It’s crazy that their profit margin is above 50 %, before the AI craze I only knew such margins from drug trafficking cartels (supposedly).

Well, being best of the best always pays off. It's obviously hard to understand to people bad at everything.

Or more accurately being top dog in a duopoly position pays off

Re: Nvidia projects $673B in sales as AI demand widens

#86

Post by reticulates »

zozbot234 wrote: post #80
reticulates wrote: post #68

Earlier quoted context omitted.

I don’t think this line of thinking is particularly robust because it ignores how AI is being used and where the resource usage is coming from. Right now there are a small number of very very resource intensive use cases that are being subsidized by OpenAI and Anthropic. There are people generating millions of lines of code because it’s basically free at the point of use, despite the code producing very little value.…

> Anthropic and OpenAI frequently “reset” customer limits to allow them to use even more resources at no additional cost. Surely this applies to fixed-price subscriptions, not per-token spend? Large enterprises (the "very very resource intensive" large-scale users) have to pay per token.

A lot of companies avoid paying for usage by encouraging their employees to use individual subscriptions. Outside of the short lived tokenmaxxing fever dream, enterprises are conscious of their usage with companies like Uber and Amazon reigning in their usage massively and companies like Ramp building their own routers for cost minimization.

Facebook is reportedly the company that spent $500 million in a single month on tokens. There are individual non-enterprise users rotating multiple subscriptions incurring $10k+ in tokens per subscription. Facebook’s $500 million month… is equivalent to ~10k individual subscriptions which could be as little as a few thousand of the heaviest users. That’s $500 million when billed on usage, or ~$2 million on plans.

The reason resets are such a big deal (people have set up websites to track them, tweets announcing them get millions of impressions) is because there are huge numbers of users pushing their plan limits every single day. If there was huge demand from usage-based customers (the large enterprises) that OpenAI and Anthropic couldn’t meet, they wouldn’t be handing out resets like candy.

I think a realistic belief is that Anthropic and OpenAI have vastly overstated demand and are using resets as a way to keep usage artificially inflated at a substantial financial cost. I’d guess fixed price plan users make up at least 95% of usage.

Re: Nvidia projects $673B in sales as AI demand widens

#87

Post by pc86 »

octaane wrote: post #77
consumer451 wrote: post #73

I have not been paying much attention to the whole circular deal thing that NVIDIA is supposedly doing. As in, they invest in their clients, who buy their products. Can anyone who actually understands finance please explain a couple things to me? 1. Are those accusations are true in a significant way, and are actually a bad thing? 2. This claimed $673B in sales, how much of it comes from NVIDIA's own money, invested…

If I give you 10 dollars, and then you put it in your pocket, and then you take it out again and give me 10 dollars back - no actual economic growth occurred. It's simply shuffling money around; the amount stays the same.

Two economists are walking down a forest path and they come across a piece of animal excrement. The first economist turns to the second and says "I'll give you $100 to eat that!" The second one eats it and the first one gives him $100. They start walking again and a few minutes later they come to another piece of animal excrement. The second economist now looks at the first and says "I'll give you $100 to eat!" The first one eats it and collects his money.

They walk a bit more and the first one says, "You know, I gave you $100 to eat shit, and you gave me the same $100 to eat shit. I can't help but think we both just ate shit for nothing." The second one responds, "That's not true at all! We increased the GDP by $200!"

Re: Nvidia projects $673B in sales as AI demand widens

#88

Post by ef33d »

octaane wrote: post #77
consumer451 wrote: post #73

I have not been paying much attention to the whole circular deal thing that NVIDIA is supposedly doing. As in, they invest in their clients, who buy their products. Can anyone who actually understands finance please explain a couple things to me? 1. Are those accusations are true in a significant way, and are actually a bad thing? 2. This claimed $673B in sales, how much of it comes from NVIDIA's own money, invested…

If I give you 10 dollars, and then you put it in your pocket, and then you take it out again and give me 10 dollars back - no actual economic growth occurred. It's simply shuffling money around; the amount stays the same.

Wrong framing.

Nvidia is investing - it is using its shareholder's cash under the assumption it will create value for them.

Re: Nvidia projects $673B in sales as AI demand widens

#89

Post by consumer451 »

0x457 wrote: post #81
consumer451 wrote: post #73

I have not been paying much attention to the whole circular deal thing that NVIDIA is supposedly doing. As in, they invest in their clients, who buy their products. Can anyone who actually understands finance please explain a couple things to me? 1. Are those accusations are true in a significant way, and are actually a bad thing? 2. This claimed $673B in sales, how much of it comes from NVIDIA's own money, invested…

What do you mean by “if true”? It’s a fact. It’s “only” bad if what they’re investing in goes south, because NVIDIA gets hit twice: it loses money on the investment and loses the GPU demand. NVIDIA says it has invested nearly $50B in frontier labs. According to NVIDIA, “the AI labs for which NVIDIA expects to leverage its balance sheet should account for roughly one-quarter of NVIDIA’s business next year.” To be clea…

I didn't take enough time to be clear. What I really meant was something like: are they giving these companies money to directly buy their own products, or to spend on other things, so that they can grow enough to be able to buy NVIDIA products?

I am not sure if the distinction makes a difference, but the latter sounds a lot more reasonable to me.

Re: Nvidia projects $673B in sales as AI demand widens

#90

Post by ef33d »

minraws wrote: post #76
kemiller wrote: post #59

Earlier quoted context omitted.

Yeah, I think there's a tendency to underestimate how much demand is still gated behind cost constraints. The market for this is HUGE. The PC era, call it 1975-2005, was one of the greatest wealth creation events in history, was characterized by the cost of the underlying commodity dropping mercilessly for the whole time. Each time it did, the space of problem you could solve with a PC would increase, to the point th…

> how much demand is still gated behind cost constraints. The market for this is HUGE. I think this misses the actual limits here. The problem isn't demand it's, "how much people are willing to spend on it". Cheap AI has to be served on cheap compute, and if inference gets cheap enough to unlock massive usage numbers, by definition it also doesn't require anywhere near as much infrastructure per unit of demand. Take…

"The problem isn't demand it's, "how much people are willing to spend on it".

Lol its not even that - its what can I do with it? Which eventually has to show up somehow in the financials - from a macroeconomic stand point. Software production is microeconomic.

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