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OpenAI, Nvidia fuel $1T AI market with web of circular deals

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Re: OpenAI, Nvidia fuel $1T AI market with web of circular deals

#201

Post by cs702 »

Anecdotally, many people at OpenAI, Nvidia, Oracle, etc., sincerely believe their company's own hype.

They remind me of the story about the oil prospector in Warren Buffett's year-end 1985 letter to Berkshire Hathaway shareholders:

> An oil prospector, moving to his heavenly reward, was met by St. Peter with bad news. “You’re qualified for residence”, said St. Peter, “but, as you can see, the compound reserved for oil men is packed. There’s no way to squeeze you in.” After thinking a moment, the prospector asked if he might say just four words to the present occupants. That seemed harmless to St. Peter, so the prospector cupped his hands and yelled, “Oil discovered in hell.” Immediately the gate to the compound opened and all of the oil men marched out to head for the nether regions. Impressed, St. Peter invited the prospector to move in and make himself comfortable. The prospector paused. “No,” he said, “I think I’ll go along with the rest of the boys. There might be some truth to that rumor after all.”

Source: https://berkshirehathaway.com/letters/1985.html

Re: OpenAI, Nvidia fuel $1T AI market with web of circular deals

#202

Post by mittermayr »

throw-10-8 wrote: post #142
altacc wrote: post #135

Earlier quoted context omitted.

The other day I was helping somebody choose some funds to invest in. The majority of "global" or "index" funds we looked into either directly or indirectly had the largest share of holdings in Nvidia, Microsoft, Meta, Alphabet, AMD. Often these were about 50-70% of their portfolio. The returns for the past year look great but the crash is going to be devastating and widespread because so many investments link back to…

I completely withdrew from the US market last Nov 5th. It's plainly obvious where all of this is going.

well, this means you've missed out on everything since then, wouldn't a simple stop order have been a reasonable alternative on this?

Re: OpenAI, Nvidia fuel $1T AI market with web of circular deals

#203

Post by Eliezer »

liendolucas wrote: post #178
Traubenfuchs wrote: post #141

Earlier quoted context omitted.

> Can you get that without adding a payment mechanism? No! There are actually two free tiers. The limited free tier you get without adding a CC and then this advanced "always free" tier I am using, where you have to use and verify a CC and have to pay big bucks if you mess up. limited free tier: 300$ to be spent in 30 days advanced always free tier: https://docs.oracle.com/en-us/iaas/Content/FreeTier/freetier...

So it's free... Until is not. My take on this would be that if Oracle makes any change to that "free" tier and you do not take proper action you might be automatically charged hefty amounts from your credit card. No, thanks. It's way way safer to spend few bucks a month in other VPS options than get a big surprise on your credit card.

Privacy.com has always been a working general solution to this, for me. Disposable CC aliases with spending caps.

Re: OpenAI, Nvidia fuel $1T AI market with web of circular deals

#204

Post by lotsofpulp »

jongjong wrote: post #196
Angostura wrote: post #14

This reminds me of around 2002 when I wrote an article looking at how all the web behemoths at the time were claiming profitability through ad sales, but actually the vast majority of ads were from one web behemoth advertising on an other's site and vice versa.

But you can't fake profits that way (without cooking the books); you can only fake revenue. That's why profits matter. Though I guess with high velocity of money circulating in tight loops, everyone involved can feel rich. 1 million dollars changing hands once per day can potentially mint 365 'millionaires' during the course of a year. If they just pass it back and forth among themselves to buy each other's stocks an…

> it means that Alice's net worth is at least $10 million...

Some people might interpret or represent the aforementioned transaction as justification for thinking Alice's net worth is at least $10M, but it is not an objective measure of Alice's purchasing power (as it would be in the case that Alice had $10M cash).

>The same money can hop around in circles between an insane number of people when it's just 'revenue' because revenue is not taxed (after expenses). Only profits are taxed

On the US federal level. Not sure about other countries, but quite a few other governments in the US do tax revenue.

https://taxfoundation.org/data/all/state/state-corporate-inc...

>Nevada, Ohio, Texas, and Washington impose gross receipts taxes instead of corporate income taxes. Delaware, Oregon, and Tennessee impose gross receipts taxes in addition to their corporate income taxes. Some localities in Pennsylvania, Virginia, and West Virginia likewise impose gross receipts taxes, which are generally understood to be more economically harmful than corporate income taxes.

See also:

https://en.wikipedia.org/wiki/Gross_receipts_tax

Re: OpenAI, Nvidia fuel $1T AI market with web of circular deals

#205

Post by rhetocj23 »

re-thc wrote: post #200
rhetocj23 wrote: post #199

Earlier quoted context omitted.

You haven’t brought in the side costs into your analysis

> You haven’t brought in the side costs into your analysis And you haven't considered that Deloitte might get this money some other way anyway. It's been budgeted and needs to be spent by the government department for this financial year. They'll find another project to hand out.

lol you and I are not talking about the same stuff mate

Re: OpenAI, Nvidia fuel $1T AI market with web of circular deals

#206

Post by tim333 »

jongjong wrote: post #196
Angostura wrote: post #14

This reminds me of around 2002 when I wrote an article looking at how all the web behemoths at the time were claiming profitability through ad sales, but actually the vast majority of ads were from one web behemoth advertising on an other's site and vice versa.

But you can't fake profits that way (without cooking the books); you can only fake revenue. That's why profits matter. Though I guess with high velocity of money circulating in tight loops, everyone involved can feel rich. 1 million dollars changing hands once per day can potentially mint 365 'millionaires' during the course of a year. If they just pass it back and forth among themselves to buy each other's stocks an…

You can fake profits. Company A hands $1m to company B to buy equity in it. Company B hands the $1m to A to run ads on A.

Under GAAP (normal accounting) A has a profit.

In reality are they profiting? Who knows - it depends how A does as a business.

Re: OpenAI, Nvidia fuel $1T AI market with web of circular deals

#207

Post by jongjong »

tim333 wrote: post #206
jongjong wrote: post #196

Earlier quoted context omitted.

But you can't fake profits that way (without cooking the books); you can only fake revenue. That's why profits matter. Though I guess with high velocity of money circulating in tight loops, everyone involved can feel rich. 1 million dollars changing hands once per day can potentially mint 365 'millionaires' during the course of a year. If they just pass it back and forth among themselves to buy each other's stocks an…

You can fake profits. Company A hands $1m to company B to buy equity in it. Company B hands the $1m to A to run ads on A. Under GAAP (normal accounting) A has a profit. In reality are they profiting? Who knows - it depends how A does as a business.

Damn. Didn't think of that. Seems I have a very naive definition of 'profit'.

It's crazy how all these small subtleties in definitions of various terms can create something so abominable in the aggregate. Makes one want to reach for a tinfoil hat. Not sure I can even trust the company which makes the tinfoil at this point.

Re: OpenAI, Nvidia fuel $1T AI market with web of circular deals

#208

Post by DonsDiscountGas »

IshKebab wrote: post #190

> remains largely unproven as an avenue for profit-making That seems like a bit of a stretch. How much money is OpenAI making?

Pretty sure they're losing money on the products that they actually sell. All the cash they have is coming from investors (ie hype).

Re: OpenAI, Nvidia fuel $1T AI market with web of circular deals

#209

Post by fransje26 »

stared wrote: post #195

There is a beautiful scene from "The Wolf of Wall Street", in which Matthew McConaughey outshines Leonardo DiCaprio. https://www.youtube.com/watch?v=Y4iBdIq0aaY I think it serves as a good commentary.

And plop! goes the bubble.

Re: OpenAI, Nvidia fuel $1T AI market with web of circular deals

#210

Post by shell_game »

neuronic wrote: post #134
XorNot wrote: post #119

Earlier quoted context omitted.

What you're missing is that real value can be created in these exchanges - Nvidia really makes chips for example. The issue is that it's an industry of investment which exists solely to power more investment in AI - the entire chain is still assuming that someone will eventually pay for this. At the end of the day all that money leaks out to employees and suppliers...but no one those people transact with may have any…

That's only really value if the chips are useful and if there are people buying the chips for something they want to do with them. It's entirely based on the perception that LLM training & inference is here to stay at ever growing scales when the shortcomings of Artificial Dreaming are increasingly scrutinized. Not all businesses want to end up paying refunds to their clients like Deloitte [1] because the LLM halluci…

Deloitte just bought like 400k Claude enterprise licenses. Bad example.
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