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Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

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Re: Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

#111

Post by aurareturn »

vb-8448 wrote: post #22
aurareturn wrote: post #3

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…

  - 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
Coreweave and Nebius think this is a great business model. Their lenders also think this can work. It's not the fault of Nvidia.

If their business model thinks they can make a profit doing it this way, why stop them?

The core problem here seems to be that people think your supplier having an equity stake in your company is wrong or risky.

Re: Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

#112

Post by aurareturn »

michaelt wrote: post #101
aurareturn wrote: post #3

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…

Bear in mind the last big thing from the tech industry was cryptocurrency. And that was rife with scams, chicanery, and nonexistent investments. As well as needing lots of GPU-filled power hungry data centres. So I think a lot of people are viewing the AI boom through the same lens.

I don't think the tech industry embraced cryptocurrency.

There are a few outliers like Meta's basket of currency crypto attempt and Sam Altman's World Coin.

Meanwhile, the entire tech industry has embraced LLMs one way or another.

Re: Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

#113

Post by MasterScrat »

darksim905 wrote: post #86

This isn't really related to the post, but I need to vent I suppose. CoreWeave feels very YC-ish. I thought I had an in as a referral for a position there and got interviewed by someone who knew a lot of my peers where I worked. Dude seemed to ask very textbook style questions that you would only learn if you went to a school system for this particular position/subject. I guess I didn't answer to their satisfaction d…

How is what you describe "YC-ish"?

Re: Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

#114

Post by aurareturn »

didntknowyou wrote: post #46
aurareturn wrote: post #3

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…

anyone can isolate one number to fit their bias. if you look at the wider financing in the industry and the context of multiple AI deals in the billions without any cold hard cash flow or reasoning it kinda makes sense

But we're seeing Anthropic add $15b ARR every month. They're adding 0.34 Salesforce every single month! In 3 months, they add one Salesforce business.

How are we still saying there is no outside money flowing in? Demand is so great that no one has any extra capacity.

And clearly, the more compute we have, the better the results. AI intelligence has not hit a ceiling yet. More compute means more training, more inference, more thinking, more verification, more multi-agent work.

Re: Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

#115

Post by Der_Einzige »

michaelt wrote: post #101
aurareturn wrote: post #3

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…

Bear in mind the last big thing from the tech industry was cryptocurrency. And that was rife with scams, chicanery, and nonexistent investments. As well as needing lots of GPU-filled power hungry data centres. So I think a lot of people are viewing the AI boom through the same lens.

[flagged]

Re: Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

#116

Post by Der_Einzige »

mNovak wrote: post #73
ilaksh wrote: post #44

Dumb question, but when the Nebius capacity dashboard says they have around 3 non-preemptible B200s available, does that mean _total_, or is it just how many I myself might be able to rent on demand? One aspect of the profitability might be the utilization and the pricing a few years down the line for slightly older hardware. Already now it seems like the increased processing you get from newer devices versus the cos…

> So the question is can they keep the pricing up on the older ones a few years down the line They don't expect to keep the prices flat over time, and everyone involved will have planned for this. Prices are highest when they're the newest and greatest (part of why it's valuable for neoclouds to be first in line for new models), and drop year by year as newer GPU models can do equivalent work at lower cost. You can s…

Why aren’t you talking about how A100 and H100 prices have again spiked and in some cases are higher than 2023! (This chart you posted isn’t fully accurate but even it admits that a100 prices are basically flat since 2024)

Micheal berry doesn’t know shit about GPU pricing or depreciation schedules. A100 demand is very high and easily 2 dollars an hour for reserved right now.

B200 and Vera reubin don’t help much if you don’t benefit from quantization, and that’s exactly my situation and many other AI research orgs situation.

A100s are going to continue making money per hour until 2030. Mark my words.

Re: Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

#117

Post by Der_Einzige »

RetroTechie wrote: post #31

Might be a blessing in disguise that these companies can't roll out datacenters as quick as they want (due to financing, power issues, permit delays or whatever). That puts a cap on surplus (potentially unused?) datacenter capacity that's around by the time the AI bubble pops.

There is no AI bubble. The underlying fundamentals do in fact line up with the market. The faster you realize this will never pop, the faster you realize that you too can make money in the biggest gold rush in human history.

Re: Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

#118

Post by Der_Einzige »

leonidasrup wrote: post #74
montyanderson wrote: post #47

Earlier quoted context omitted.

nvidia's forward p/e is 24. walmart's is 39.

That is exactly the point. These circular deals artificially increase the earnings of company and as a result artificially decrease price–earnings ratio.

The amount of coping, seething etc at the fact that Nvidia is hilariously profitable leads to some of the funniest cognitive dissonance I’ve seen on the internet.

Re: Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

#119

Post by mschuster91 »

Der_Einzige wrote: post #118
leonidasrup wrote: post #74

Earlier quoted context omitted.

That is exactly the point. These circular deals artificially increase the earnings of company and as a result artificially decrease price–earnings ratio.

The amount of coping, seething etc at the fact that Nvidia is hilariously profitable leads to some of the funniest cognitive dissonance I’ve seen on the internet.

The problem is - what happens when the AI bubble bursts for whatever reason, and suddenly NVIDIA has to deal with a lot of its high-margin business going away? With its outsized weight amongst most indices and consequently ETFs, even a small percentage of value correction will wipe out a lot of wealth.

We've seen that with the dot-com bubble in the past, a lot of the "dark fiber" that we use and rely on today was gotten for incredibly cheap after the collapse of debt-fueled customers and, subsequently, the collapse of the ISPs.

That scenario is what I am afraid of repeating, partially because a lot of the market (especially at the tail end, such as datacenter companies investing into buildouts, and consequently construction companies investing in machinery and staff) is fueled by debt and a domino-level collapse can trigger another cascading debt default crisis that can then send off banks into failure.

Re: Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom

#120

Post by lionkor »

Der_Einzige wrote: post #115
michaelt wrote: post #101

Earlier quoted context omitted.

Bear in mind the last big thing from the tech industry was cryptocurrency. And that was rife with scams, chicanery, and nonexistent investments. As well as needing lots of GPU-filled power hungry data centres. So I think a lot of people are viewing the AI boom through the same lens.

[flagged]

"the real deal"? this whole framing is black and white.

It can be useful and also be a complete and utter fucking scam the way it's "produced" and sold.

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