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Nvidia is the central bank of AI

economist.com

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Re: Nvidia is the central bank of AI

#331

Post by wsatb »

spott wrote: post #113
master_crab wrote: post #95

Earlier quoted context omitted.

“as long as it’s cash flow continues” is doing a lot of optimistic heavy lifting. The whole premise of the circular financing worry is that Nvidia sits in the middle of all the guarantees made to companies like OpenAI. If any of those companies become insolvent, Nvidia is on the hook for it. Also Nvidia isn’t really creating money. The 500B number is third party capital that already exists (BX, Apollo, etc).

Yea, but they would have to become insolvent in a way that makes compute lose value. The reason Nvidia is comfortable making these deals is because if OpenAI can’t use the compute, someone else can. Granted OpenAI going insolvent likely means a drop in the value of compute…

> The reason Nvidia is comfortable making these deals is because if OpenAI can’t use the compute, someone else can.

They have no idea how much compute will be needed. They are estimating and trying to push it but they do not know the future.

Re: Nvidia is the central bank of AI

#332

Post by omgwtfbyobbq »

tonyarkles wrote: post #315
janalsncm wrote: post #276

Earlier quoted context omitted.

Jevon’s paradox is a common talking point but it is not a law of nature. LED lightbulbs use 80% less energy than incandescent but you don’t see people using 5x more lights on their homes. The overall energy used to light homes has decreased. And even if compute demand were perfectly elastic it’s only a good thing insofar as it drives demand for new Nvidia hardware. If tokens can be served from Apple hardware or Googl…

As I look up and see three lightbulbs side-by-side over my desk and another one in the lamp on the desk… which is dramatically more light than the old 100W bulb used but also lower energy consumption.

That's the rebound effect, and is fairly common. Jevons is a relatively uncommon edge case.

Re: Nvidia is the central bank of AI

#333

Post by InsideOutSanta »

andsoitis wrote: post #237
InsideOutSanta wrote: post #235

Earlier quoted context omitted.

Believing only makes things true for so long until things fall apart. You can't keep burning billions every quarter. At some point, you run out of investors who believe, and the ones you have run out of money (see: Softbank).

Yes of course. Is the point you're actually trying to make that investors are making a pure call, so their belief in the story is misplaced? That they should believe a different story?

I think I made my point in the original post you responded to: OpenAI heavily subsidized token cost using investor money. If they go under, there will still be demand for that compute, but because OpenAI is paying more for it than it is actually worth (i.e. what the end customers are willing to pay), any company replacing OpenAI will not pay the same amount OpenAI pays.

So when people say "somebody else will buy that compute", they are correct, but they are ignoring that it will still cause a massive decrease in revenue generated by that compute.

If you're asking me what my point about "believing" is, it's this. OpenAI is losing billions every quarter. It's only staying afloat because it can still find investors who believe in its ability to eventually become incredibly profitable. But there are signs that this is starting to change (e.g. it's unlikely that Softbank will be able to find much more money to give to OpenAI). If OpenAI can't keep raising more money and can't IPO at the level they need (as seems to be the case, given that they keep pushing any IPO date forward), OpenAI will eventually run out of money.

I'm not sure how investors believing in things changes any of this, so now it's your turn to explain what the point is you're actually trying to make.

Re: Nvidia is the central bank of AI

#334

Post by abenga »

bluefirebrand wrote: post #188
Espressosaurus wrote: post #71

Earlier quoted context omitted.

Much of the gaming market is phone games however, not traditional consoles or PCs. Edit: about half in fact! The rest is shared between the other traditional gaming types.

This feels so insane to me, because I don't think I know anyone who plays phone games

This probably includes little silly games like Candy Crush, and (maybe) others that seem more like "paper" games like Sudoku, Wordle, Connections, etc. Many play those, especially the second bucket.

Re: Nvidia is the central bank of AI

#335

Post by tripledry »

dahart wrote: post #317
anu7df wrote: post #198

Cracks are starting to appear. Open Ai and Anthropic are publicly asking for slowdown in AI research. Translation: We see this technology not being any more useful than what it is now, no AGI is coming, and the first one to accept this and slow down the dollar burn rate will incur the wrath of the market. So let's say this big boogey man technology will end all life on earth and we all slow down together. Bonus point…

> Cracks are starting to appear. Open Ai and Anthropic are publicly asking for slowdown in AI research. Translation: We see this technology not being any more useful than what it is now, no AGI is coming Predicting a usefulness plateau is absolutely wild given how fast AI agents have been improving at writing code this year. I have doubts about AGI but I think you’re making assumptions and translating it wrong. These…

I agree with you generally, just an observation on coding specifically.

Have the models improved since Opus 4.x? I find the newer models are not better in my day job, maybe in one shotting mvp's and other tasks.

Not trying to argue your point, just intrested in the coding aspect, if the models were improving as fast as benchmarks I would expect capability improvements to be obvious, but talking to people and reading forums, it seems everyone has a different opinion.

Re: Nvidia is the central bank of AI

#336

Post by uncle_kostya »

downrightmike wrote: post #321
JumpCrisscross wrote: post #49

> worth around $5.4trn Note that the Fed has a $6.7tn balance sheet [1]. (This is a silly comparison. But still fun.) The real comparison: Nvidia's $500+ billion of investments and commitments [2] is substantially more than any easing the Fed has done in the same time [3]. Monetarily, Nvidia is creating a lot of money in our economy. The good news: I have seen no evidence Nvidia has borrowed against its stock or othe…

All on the back of TSMC

Is anyone even trying to compete with TSMC?

What is the barrier to entry?

Re: Nvidia is the central bank of AI

#337

Post by chrisandchris »

JumpCrisscross wrote: post #112
master_crab wrote: post #95

Earlier quoted context omitted.

“as long as it’s cash flow continues” is doing a lot of optimistic heavy lifting. The whole premise of the circular financing worry is that Nvidia sits in the middle of all the guarantees made to companies like OpenAI. If any of those companies become insolvent, Nvidia is on the hook for it. Also Nvidia isn’t really creating money. The 500B number is third party capital that already exists (BX, Apollo, etc).

> “as long as it’s cash flow continues” is doing a lot of optimistic heavy lifting It's not. It's stating a condition. For traditional banks, a stock crash can independently trigger a failure. > whole premise of the circular financing worry is that Nvidia sits in the middle of all the guarantees made to companies like OpenAI. If any of those companies become insolvent, Nvidia is on the hook for it Sorry, I meant reve…

> Sorry, I meant revenues. If Nvidia's revenues stay stable,

But aren‘t they currently sitting on like a margin of over 80%? So I assume their revenue will fall, because people are not going to like that in the long-term.

Re: Nvidia is the central bank of AI

#338

Post by blfr »

tripledry wrote: post #335
dahart wrote: post #317

Earlier quoted context omitted.

> Cracks are starting to appear. Open Ai and Anthropic are publicly asking for slowdown in AI research. Translation: We see this technology not being any more useful than what it is now, no AGI is coming Predicting a usefulness plateau is absolutely wild given how fast AI agents have been improving at writing code this year. I have doubts about AGI but I think you’re making assumptions and translating it wrong. These…

I agree with you generally, just an observation on coding specifically. Have the models improved since Opus 4.x? I find the newer models are not better in my day job, maybe in one shotting mvp's and other tasks. Not trying to argue your point, just intrested in the coding aspect, if the models were improving as fast as benchmarks I would expect capability improvements to be obvious, but talking to people and reading…

Yes, benchmarks are gamed and only loosely indicative of real world performance.

Also yes, Fable is massively better than Opus. It requires significantly less instruction and specs and produces more directly mergeable code.

The improvement is obvious as soon as my Fable allotment runs out and I try to do something with Opus. Have you given the same (larger) task to Opus and Fable?

Re: Nvidia is the central bank of AI

#339

Post by JumpCrisscross »

roenxi wrote: post #284
JumpCrisscross wrote: post #112

Earlier quoted context omitted.

> “as long as it’s cash flow continues” is doing a lot of optimistic heavy lifting It's not. It's stating a condition. For traditional banks, a stock crash can independently trigger a failure. > whole premise of the circular financing worry is that Nvidia sits in the middle of all the guarantees made to companies like OpenAI. If any of those companies become insolvent, Nvidia is on the hook for it Sorry, I meant reve…

> It absolutely is. Similar to the way banks create money [1]. The commitments support credit that wouldn't exist without it. Making a loan/offering credit isn't automatically money creation - the amount of money in the system before and after the loan might be the same. Haven't been following Nvidia all that closely, but it seems a little bit unlikely that they're a commercial bank. Financial chicanery they may be d…

> Making a loan/offering credit isn't automatically money creation

The Fed can limitlessly increase monetary base (MB) to increase M1. Non-bank lenders create M4 which turns into M2 through the money markets which turns into M1 through the banks. More convoluted and more limited, by design. But the net effect is the same–more M1.

More broadly: when you open a bar tab, you're literally creating money, even if it never hits M1.

Credit is always money creation. When it's done at scale it's almost always creating M1.

Re: Nvidia is the central bank of AI

#340

Post by JumpCrisscross »

chii wrote: post #330
JumpCrisscross wrote: post #49

> worth around $5.4trn Note that the Fed has a $6.7tn balance sheet [1]. (This is a silly comparison. But still fun.) The real comparison: Nvidia's $500+ billion of investments and commitments [2] is substantially more than any easing the Fed has done in the same time [3]. Monetarily, Nvidia is creating a lot of money in our economy. The good news: I have seen no evidence Nvidia has borrowed against its stock or othe…

> Monetarily, Nvidia is creating a lot of money in our economy. nvidia's money either comes from equity, or from debt. This means this money is "created" not from nothing, but from future commitments (ala, debt repayments, or promise of profits), which is not the same as what comes out of the Fed. The Fed printing has no backing behind it - it is definitely inflationary if they do it. Investment from nvidia (or any o…

> this money is "created" not from nothing, but from future commitments (ala, debt repayments, or promise of profits), which is not the same as what comes out of the Fed

Most money is created by banks, not by the Fed. When banks create deposits they're booking it against a loan. Similarly, the Fed creates money by buying assets, principally Treasuries. There is an offsetting account. The only party that can truly just "mint" currency is the US Mint.

> you cannot compare Fed printing money to company investing money

Yes, you can. Nvidia creates M4 which drives M2 and thus M1. Banks create M1. The Fed creates monetary base. These are different components of the same money supply [1].

[1] https://en.wikipedia.org/wiki/Money_supply#United_States

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