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If you think it's a problem, short NV or buy competitors who are not doing this or don't buy their share at all. If you're right, they'll get burned soon enough and it's none of your business!
If it goes bust who bails them industry out?
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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…
If you think it's a problem, short NV or buy competitors who are not doing this or don't buy their share at all. If you're right, they'll get burned soon enough and it's none of your business!
With the rising prices of RAM, I feel these companies owe us money - in particular NVIDIA. I feel that the "free" market is not working when you have de-facto monopolies, as is the case right now. The AI explosion exposed that problem. Why are politicians not doing anything? Too bribed already?
Manyfacturers aren't artificially restricting supply, they're running fabs full-tilt. You could want them to build more fabs to meet demand. Which they are, but at a more modest rate than what you would want, because those manufacturers have been burned in previous boom-bust cycles. Never mind that fab-construction lead times are measured in years.
And what's stopping you from fabricating & selling RAM? I've read it's very profitable! Oh yeah, it takes many $B to pull a SOTA fab out of the ground.
Vendors price-gouging? Probably. Wouldn't you?
TLDR; it's not a monopoly issue. This is a high-tech specialized market where a ridiculous spike in demand is near-impossible to cater for. You want some new RAM-heavy gadgets? Shell out $, adjust your RAM 'wants', or be patient.
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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 t…
If these were all private entities, I think it'd be okay.
But they're public entities and they're using the pittance of investment as a force multiplier on their stock price, which they're then regularly using to raise capital.
A lot of dumb money in retail investors (as well as corporate) are a big reason this valuations bubble is occuring - which is really the elephant in the room. It's not that the tech isn't real. It's that the valuations behind it have already priced in maybe a decade of profit that hasn't come close to materializing for the LLM vendors; although, the shovel sellers and makers are doing phenomenal - and they have a vested interest to keep the party going with many sweetheart financing/equity deals.
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People are looking for the AI bear case - so this headline gotta work better. Its not a bad idea haha. More people suspect there is some circular shenanigans but want confirmation -- so maybe this is the best way to lure them in. Come as the bear, stay for the bull. With just these 2 comments, now I'm really gonna read that article.
Can someone even outline the AI bull case? I can’t fathom one at all. https://isaiprofitable.com/ The only profitable company is the one running the scam.
That said, I'm aligned with you that I'm not clear who is profiting from it other than oligarchs. I'm also quite certain the valuations are fully in bubble territory, pricing in decades of profit I don't see playing out for the LLM vendors. That said, I think it'll be a bit before it deflates.
Way too many regular tech bros making money/invested in it for a reasonable discussion on the topic on HN, imo.
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Can someone even outline the AI bull case? I can’t fathom one at all. https://isaiprofitable.com/ The only profitable company is the one running the scam.
Do you use it or is this speculation? The AI tooling I used 12-24 months ago if frozen in time, monetized correctly is probably 100x the capability of what software could do before (And software was already eating the world long before AI). The bull case is that we just invented the 21st century equivalent of the printing press or electricity. And that website is the 19th century equivalent of someone criticizing ele…
But there were printing presses before movable type, and movable type specifically allowed creation of inexpensive books and newspapers. The printing press itself wasn't all that useful alone.
Electricity (in the form of shocking fish) was used by people thousands of years ago and Volta was fiddling with electricity to make frog legs dance in the 1800s; electricity as an industrial property required a bunch of knowledge and material science to make ... lights and motors. Electricity by itself isn't all that wonderful; a flash in the pan so to speak.
So -- what "electric light" or "movable type" is the product of LLMs? I'm sure there are, but ELI5...
I can think of "Summarize this thing for me" and "Elaborate on this half baked idea" -- and honestly "summarize this for me" is actually quite useful. But I'm not sure it is "electric lights / electric appliances" or "indoor plumbing" degree of revolutionary.
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.
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.
Gold worth tens of billions of today's US dollars was recovered, which led to great wealth for a few, though many who participated in the California gold rush earned little more than they had started with.
The human and environmental costs of the Gold Rush were substantial. Native Americans, dependent on traditional hunting, gathering and agriculture, became the victims of starvation and disease, as gravel, silt and toxic chemicals from prospecting operations killed fish and destroyed habitats.[0]
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- 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 t…
> The core problem here seems to be that people think your supplier having an equity stake in your company is wrong or risky. If these were all private entities, I think it'd be okay. But they're public entities and they're using the pittance of investment as a force multiplier on their stock price, which they're then regularly using to raise capital. A lot of dumb money in retail investors (as well as corporate) are…
And before someone tells me AI demand is fake and circular, my company is spending thousands on Anthropic a month, up from $0 in 2025. And no, we're not getting scammed by Anthropic or tokenmaxxing for no reason. We are getting value. At minimum, my company is not part of this circular thing.
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> Is there any room to doubt/discuss whether GAAP rules could be improved? Looking at the structure of the deal and analyzing the risks is perfectly valid. Screaming "accounting subterfuge!" when this is simple GAAP accounting is a different matter. CoreWeave is buying chips from Nvidia, paying Nvidia full price, and taking title to them. Nvidia has no right to take them back. It instead has a potential obligation, s…
I'm not the commenter claiming that this currently violates GAAP - that's someone else. To summarise my opinion, subjectively it seems like a better distinction could be made in GAAP to look through this agreement and others like it. (Hypothetically if Hertz agreed to rent back rather than repurchase, like mentioned in a previous comment, that would also be suspect). But I'm not the one to propose what the preconditi…
There's two things here: accounting and disclosure.
The accounting, which is what GAAP deals with, really doesn't seem problematic. CoreWeave is giving Nvidia cash for the chips and taking title to them. There's no associated repurchase right or obligation. So treating this as a sale and booking the revenue is the most sensible accounting approach. Trying to make it into something it's clearly not because it makes some people feel better isn't sensible.
I think the more important discussion is around disclosure: how much information Nvidia should be required to provide about its relationships with companies like CoreWeave, and where and when. Right now, we have to paint the picture based on multiple disclosures. We know about the equity stake through a 13F. The backstop was in an 8-K that was filed two years after the agreement was signed. The equity stake is not high enough that most of the rules around "related party" disclosures come into play.
I suppose you could make the argument that the market obviously sees the circularity here despite the patchwork disclosures that apply, so the circularity is ostensibly being priced in to the stock prices, debt, etc. But there's a legitimate argument that the market would be better served if disclosure was earlier and cleaner.
Even so, none of this would prevent Nvidia from engaging in these types of transactions because there's nothing inherently illegal about them.