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Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee

reuters.com

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Re: Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee

#141

Post by nl »

HDBaseT wrote: post #28
cmiles8 wrote: post #26

Nvidia is turning into a savings and loan company that happens to design computer chips on the side. What could possibly go wrong.

The loans will just take longer to repay. There is a market for Anthropic & OpenAI, it just likely doesn't have the 200B profit each year required for the maths to make sense. If shit hits the fan, the companies collapse, then Nvidia gets their money from the investors anyways.

They don't need $200B profit for the math to make sense. Where are you getting that?

Anthropic is expected to IPO around $2T valuation.

That's around half Google's value, and Google's profit is around $130B.

So using the same P/E ratio as Google that implies $65B profit.

Of course Google is a mature company and Anthropic is growing revenue faster than any company in history so you'd expect Anthropic to have a higher P/E ratio than Google which means a lower profit to justify that valuation.

In any cay startups are valued on revenue rather than profit so that's the real number people will be looking at.

Re: Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee

#142

Post by conmod278 »

jimbo808 wrote: post #30
gymbeaux wrote: post #11

What would happen to Nvidia, Anthropic, OpenAI, if tomorrow someone released an open weights model on HuggingFace that matched performance and accuracy of Opus 5 running locally on an RTX 5070? That won’t happen tomorrow, but it will likely happen someday… what’s the plan beyond “don’t be the one holding the bags?”

There’s no reason to assume frontier-level intelligence eventually collapses all the way onto a midrange consumer GPU. In fact, there are quite a few reasons not to assume that (information-theoretic constraints, etc).

Core reasoning model with plugins for specialized tasks like "Pip install" developed using the new science of AI neurosurgery.

Re: Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee

#143

Post by rsynnott »

ColdStream wrote: post #15
u1hcw9nx wrote: post #4

I would like to see the numbers. If Nvidia sells hardware for $100B with 75% cross margin, and provides $50 billion in backstop for that same hardware, it would be still be nicely profitable deal ($25B) if the backstop capacity would be a total write-off recovering $0. Reselling that capacity in some large discount below already low backstop price would increase the profits. It's all those pension funds, sovereign we…

Pretty much, I have said it for a while now, Softbank and Oracle are the ones I would be worried about. Both of them have put their companies wealth behind this, if it goes down so will they. Others have played it fairly smart in terms of insulating potential issues.

Oh, no! Anyway...

Re: Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee

#144

Post by conmod278 »

fooker wrote: post #35
Taikhoom10 wrote: post #33

[flagged]

All economics is circular financing, that's how it works. You pay Apple for a MacBook, Apple uses it to develop a better MacBook. What goes wrong is leverage. We haven't seen much hint of the 10x leverage kind of deals that brought down the house in 2008.

All economy is like infinite Hilbert Hotel. You create money out of thin air to get work done in real physical world to build products and services which will in future justify the past creation of money. It's like pulling yourself forward into the "desired" future with the help of newly minted money rope. Think about it this way, most of the money in the economy just sits there in bank accounts waiting to be deployed in future. So newly minted money in a way rearranges the physical world making the future world more suitable to justify past money supply increases. In case of hilbert hotel, we make room for the new guest by simply shifting everybody by n -> n+1. The settlement never arrives because the hotel in infinite, we call always do this.

Re: Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee

#145

Post by rsynnott »

theobreuerweil wrote: post #66
anon7725 wrote: post #57

Earlier quoted context omitted.

Shouldn’t the analogy be “Apple lends you money to buy a MacBook. You pay Apple for a MacBook…”

This happens as well, no? If you pay for anything in instalments that is effectively a loan.

Outside the car industry, it's unusual for the vendor to be the lender, tho.

Re: Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee

#146

Post by watwut »

fooker wrote: post #133
watwut wrote: post #109

Earlier quoted context omitted.

It is strained analogy, heavily. I am not paid by Toyota. I am vetted for my ability to pay the loan. Me buying a car with borrowed money is not circular financing. If most of Toyota earnings went from money they borrowed to me, it would be an issue. But, in fact, that is not how Toyota business works.

Car manufacturers, famously, have a pretty decent fraction of their revenue coming from their financing subsidiaries. > I am vetted for my ability to pay the loan Exactly! Now see the article we are commenting on. Nvidia reduced the loan amount, presumably because they had doubts about OpenAI being able to pay it back. The framework used to loan you money for buying a car and loaning a company billions of dollars to…

> Car manufacturers, famously, have a pretty decent fraction of their revenue coming from their financing subsidiaries.

Which is not the same thing as circular financing we are talking about here.

Yes, if you abstract everything enough, everything is exactly the same as everything. But that does not mean it amounts to meaningful argument.

Re: Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee

#147

Post by 3ddda »

nl wrote: post #141
HDBaseT wrote: post #28

Earlier quoted context omitted.

The loans will just take longer to repay. There is a market for Anthropic & OpenAI, it just likely doesn't have the 200B profit each year required for the maths to make sense. If shit hits the fan, the companies collapse, then Nvidia gets their money from the investors anyways.

They don't need $200B profit for the math to make sense. Where are you getting that? Anthropic is expected to IPO around $2T valuation. That's around half Google's value, and Google's profit is around $130B. So using the same P/E ratio as Google that implies $65B profit. Of course Google is a mature company and Anthropic is growing revenue faster than any company in history so you'd expect Anthropic to have a higher…

Hurr durrr.

99.9% of you should stop doing valuation, especially since you don't know truly 'comparable firms' are.

Lazy slop. Worse than LLMs.

Re: Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee

#148

Post by rfff2 »

conmod278 wrote: post #144
fooker wrote: post #35

Earlier quoted context omitted.

All economics is circular financing, that's how it works. You pay Apple for a MacBook, Apple uses it to develop a better MacBook. What goes wrong is leverage. We haven't seen much hint of the 10x leverage kind of deals that brought down the house in 2008.

All economy is like infinite Hilbert Hotel. You create money out of thin air to get work done in real physical world to build products and services which will in future justify the past creation of money. It's like pulling yourself forward into the "desired" future with the help of newly minted money rope. Think about it this way, most of the money in the economy just sits there in bank accounts waiting to be deploye…

You're kinda right.

But underestanding isn't entirely complete.

Money is created upon the issuance of debt.

Re: Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee

#149

Post by rfff2 »

fooker wrote: post #35
Taikhoom10 wrote: post #33

[flagged]

All economics is circular financing, that's how it works. You pay Apple for a MacBook, Apple uses it to develop a better MacBook. What goes wrong is leverage. We haven't seen much hint of the 10x leverage kind of deals that brought down the house in 2008.

Not circular - fluid is the more appropriate term. It just 'looks' circular.

Without money - trade would not be continuous.

Re: Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee

#150

Post by rfff2 »

fooker wrote: post #39
Taikhoom10 wrote: post #37

Earlier quoted context omitted.

Uh no, NVDIA helping startups get financing so they can buy NVDIA chips is inherently damaging because eventually the debtors will not help with the financing and startups will not be able to buy chips.

Again, this is how all of economics works. A Toyota dealership arranges a loan for you. Through a bank for a used vehicle, sometimes through Toyota itself for new cars. A house builder will routinely take on part of the loan providing burden to get some of the interest. Even someone selling you their thirty year old house will often provide seller financing. You may have ideological opinions against this, which is fi…

"A Toyota dealership arranges a loan for you. Through a bank for a used vehicle, sometimes through Toyota itself for new cars.

A house builder will routinely take on part of the loan providing burden to get some of the interest"

Wrong - when you borrow money the bank has instantaneously created money for you with the asset of your future promises of delivery of cash flows.

The bank is not using somebody elses money - it is literally creating it. Debt is akin to raw material for banks - the debt being the money it now owes you today.

Its interesting how many people get close to 90% of getting it, but the last 10% is actually 90% of the understanding.

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