Nvidia projects $673B in sales as AI demand widens • Hacker News Board

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

#101

Post by credit_guy » Thu, Aug 27, 2026, 8:58 PM UTC

CoolestBeans wrote: post #95

consumer451 wrote: post #89

Earlier quoted context omitted.

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.

The distinction does make a difference and it is the former. These circular deals are two paired transactions: 1. Nvidia buys equity in an AI lab or cloud provider with cash. 2. The counterparty agrees to buy X number of GPUs from Nvidia and in exchange Nvidia guarantees to rent some Y fraction of the compute if the counterparty cannot find customers. This structure goes south during a pullback because all this liqui…

The 1 and 2 you listed can be summarized as client buys Nvidia GPUs with equity instead of cash. Clients like Anthropic or OpenAI are not exactly flush with cash right now, so such sn arrangement makes sense. Plus, it reduces Nvidia’s incentive to invest in training a frontier-level Nemotron model.

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

#102

Post by CoolestBeans » Thu, Aug 27, 2026, 9:15 PM UTC

credit_guy wrote: post #101

CoolestBeans wrote: post #95

Earlier quoted context omitted.

The distinction does make a difference and it is the former. These circular deals are two paired transactions: 1. Nvidia buys equity in an AI lab or cloud provider with cash. 2. The counterparty agrees to buy X number of GPUs from Nvidia and in exchange Nvidia guarantees to rent some Y fraction of the compute if the counterparty cannot find customers. This structure goes south during a pullback because all this liqui…

The 1 and 2 you listed can be summarized as client buys Nvidia GPUs with equity instead of cash. Clients like Anthropic or OpenAI are not exactly flush with cash right now, so such sn arrangement makes sense. Plus, it reduces Nvidia’s incentive to invest in training a frontier-level Nemotron model.

If they were buying GPUs with equity then it wouldn't show up on Nvidia's quarterly report as revenue, even if the net trade is GPUs for equity. This is the point of the structure, to make cash flows show up as top line revenue. Furthermore, the structure pushes the liabilities off-balance sheet. This means if the flows slow down, in-flows rapidly become out-flows as Nvidia has to cover its liabilities. This is the problem with the trade, it puts everything on a knife's edge.

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

#103

Post by saberience » Thu, Aug 27, 2026, 10:22 PM UTC

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…

It’s not a fact because the “circular financing” numbers don’t match at all up with Nvidia’s revenue.

Also if you think about this for anymore than a few milliseconds you realize that if Nvidia was giving away 90B to get back 90B in revenue, then none of the capex spend being reported by the hyperscalers would make any sense.

We know that Google, Meta, SpaceX, Microsoft, Nebius, CoreWeave, Amazon, are all buying huge amounts of Nvidia chips, with their own money!

This is all public info. The amounts of money Nvidia has invested in companies are tiny in comparison with their own revenue.

The amounts of “circular financing” are a drop in the bucket compared to, surprise, actual companies buying their product.

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

#104

Post by rchaud » Thu, Aug 27, 2026, 10:51 PM UTC

saberience wrote: post #103

0x457 wrote: post #81

Earlier quoted context omitted.

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…

It’s not a fact because the “circular financing” numbers don’t match at all up with Nvidia’s revenue. Also if you think about this for anymore than a few milliseconds you realize that if Nvidia was giving away 90B to get back 90B in revenue, then none of the capex spend being reported by the hyperscalers would make any sense. We know that Google, Meta, SpaceX, Microsoft, Nebius, CoreWeave, Amazon, are all buying huge…

They've all had multi-billion bond issues in 2026 so I wouldn't exactly call it "their" money.

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

#105

Post by keeda » Thu, Aug 27, 2026, 11:09 PM UTC

drbscl wrote: post #20

Sold after the price rise from this announcement. They can make the sales projection, but it doesn't mean they'll hit it: 1. Small models are rapidly growing in capability, require less compute to train and serve 2. There are more suppliers now, both in China & the US (OpenAI even have their own inferencing hardware now) 3. Memory still constrains how much they can ship in the short term

Counterpoints:

1. Depending on the data source you look at, about 50 - 60% of people use AI at work but only for 5 - 15% of work hours. That leaves about 2x (from users) times 7 - 20x (from work hours) for growth. Furthermore agentic usage is much more token-intensive than regular prompts, that's another unknown multiple that will get applied.

Small models will make a dent for sure, but even they need to run on hardware. It's not clear how much their lower resource requirements will cancel out the scope for growth, but I think it will take time for that dynamic to play out; people are only just starting to ease up on tokenmaxxing. Anthropic revenues would be the canary in the coalmine, and thankfully they'll be IPO'ing soon.

2. All the relevant fabs (mainly, TSMC) are extremely capacity-constrained, so who actually gets the chips depends on who has the best vendor relationships... and who can pay the most for them. Even Apple, famed for its supply chain mastery, is having trouble these days.

I would assume TSMC will try to keep all its customers happy but will prioritize supplying the customer that will pay it the most money, and these days that's Nvidia. Simply because that's where ~all the AI boom money is flowing. Heck, you could even imagine some form of revenue share to keep the spice errr chips flowing...

3. Memory constraints affect all vendors, they will just pass those costs on to customers, like Nvidia with its recent 15% price bump. Notably the bump was announced BEFORE the earnings; I wonder if the effects of that was reflected in these projections.

Nvidia is in the same position with acquiring chip supply that Google is with acquiring search traffic: monopoly profits shared with suppliers make it very hard for other companies to compete.

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

#106

Post by keeda » Thu, Aug 27, 2026, 11:37 PM UTC

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".

This is the right way to look at it, but a few of your estimates are a bit off. AI is being sold as an accelerator (or, if you're in a dystopian mood, total replacement) of knowledge workers. Currently knowledge worker salaries are $50 - 70 trillion a year globally, $10 - 11T in the US alone: https://gist.github.com/danielmiessler/2dc039762a202b083753b...

> Even if AI eventually replaces an enormous portion of that, it's probably not doing so at the same price. Why would customers switch otherwise?

AI is wayyyyyyy easier to wrangle than humans; no sick leaves, health insurance, perks, HR issues... heck they don't even sleep! If companies could replace us with robots, they would do so in a heartbeat. Capitalism!

So in a "what the market will bear" sense, we have an upper bound on the TAM. Indeed, I expect this is where Anthropic's ridiculous "$30 trillion" number is coming from... except now we see how they came to it.

If AI makes workers even 1% more efficient, that's a $500 - 700 billion value annually. In reality AI makes workers way more efficient (studies from the ancient era of 2024 showed about a 30% boost) so AI companies could realistically charge that much more. But then all the other factors you mentioned -- smaller models, competition, self-hosting, etc -- come into play, which put a downward pressure on revenues.

It's impossible to predict how these dynamics will play out, but the numbers involved are astronomical. This is why everyone from the frontier labs to Big Tech to VCs to nation states are scrambling to get in on it.

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

#107

Post by [deleted] » Fri, Aug 28, 2026, 3:03 AM UTC

prewett wrote: post #27

runarberg wrote: post #16

Earlier quoted context omitted.

Do not short it. I repeat, do not do this! Do not play the game of capitalism against expert capitalists who have spent the last few decades rigging the game more an more in their own favor. In very rare cases may be lucky but only for a short while. The more trades you make the more the odds stack against you, and you will loose everything. In a game where the odds are stacked against you, the only winning move is n…

Right answer, but the anti-captialist reasoning is rubbish. The simple reason why you do not want to short a stock is that it can go up infinitely, and nVidia has a four year history of going up. There is also good reason to think nVidia will hit the numbers, both because AI is booming and because nVidia is conservative in its forcasts. No capitalist conspiracy theory is needed, save the conspiracy theories for the T…

[deleted]

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

#108

Post by kennywinker » Fri, Aug 28, 2026, 7:12 AM UTC

vb-8448 wrote: post #100

kennywinker wrote: post #10

Earlier quoted context omitted.

I couldn’t find the 1000b number, but if that is “ai buildout capex” that means you think that 67% of every dollar spent on building data centers, training models, and running inference, is going directly to nvidia. Which is just silly on the face of it. Data centers need concrete, copper, DRAM, SSDs, and labour. That alone will cost more than 33%.

Maybe 67% is too much, but the GPUs are the most expensive thing in all those datacentres. Anyway, according to the latest articles[0], 1000B is the lower bound. [0] https://sg.finance.yahoo.com/news/ai-infrastructure-investme...

The most expensive thing in my house isn't even 1% of the value of my house and everything in it.

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

#109

Post by kennywinker » Fri, Aug 28, 2026, 7:14 AM UTC

chermi wrote: post #30

kennywinker wrote: post #10

Earlier quoted context omitted.

I couldn’t find the 1000b number, but if that is “ai buildout capex” that means you think that 67% of every dollar spent on building data centers, training models, and running inference, is going directly to nvidia. Which is just silly on the face of it. Data centers need concrete, copper, DRAM, SSDs, and labour. That alone will cost more than 33%.

Yeah but remember 1) stuff gets more expensive the more it's "processed"/further up the chain. It's hard to think of something further up the value chain than a modern gpu server. Just look at one input, asml machines. 2) a lot of dram, labor etc is also baked into the gpus.

Sure. Obviously GPUs are expensive. My computer is more expensive and more processed than a 2x4, but that doesn't mean that my computer is a significant percentage of the value of my house.

And it's pretty unclear what is included in the "capital expenditure" numbers. E.g. does it include training costs? does it include research costs? etc.

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

#110

Post by vb-8448 » Fri, Aug 28, 2026, 8:20 AM UTC

kennywinker wrote: post #108

vb-8448 wrote: post #100

Earlier quoted context omitted.

Maybe 67% is too much, but the GPUs are the most expensive thing in all those datacentres. Anyway, according to the latest articles[0], 1000B is the lower bound. [0] https://sg.finance.yahoo.com/news/ai-infrastructure-investme...

The most expensive thing in my house isn't even 1% of the value of my house and everything in it.

Imagine a house full of racks of gpus!