Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

bloomberg.com

Post reply on HN
Print view View original

271–280 of 321 posts

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

#271

Post by dh2022 »

01100011 wrote: post #88
chasd00 wrote: post #26

Yeah I spoke to my wife a few min ago about these deals and other indicators of a bubble. We’re updating our 401k’s and the old college fund brokerage account in the morning and have agreed to not make any additional changes until Jan 2027. Going to sit out a year and see what happens.

Equities in the US are priced in dollars. If you think the dollar is going to lose value(because the government is led by people who have repeatedly told you this is their goal) then you expect stocks to rise commensurate with the devaluation of the dollar. I am not a bitcoiner or saying the USD is done for, but it seems clear that the dollar is weakened and will continue to weaken and this is a significant risk for…

Why would stocks raise with commensurate devaluation of the dollar? Stocks financial positions (assets / liabilities / cash flow) are most likely denominated in dollars.....

If companies' financial position would be denominated in something else (gold / Yen / Euros / CNY) this comment would make more sense to me....

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

#272

Post by overfeed »

xgkickt wrote: post #269
HelloNurse wrote: post #182

Earlier quoted context omitted.

If this means that the fall of OpenAI will cause Oracle and Nvidia to crash and downsize, bubbles aren't completely bad.

Where does that leave AMD, considering OAI are taking a 10% stake?

A shareholder going bust is a no-op. However, the loss of large customer, is concerning, but less so, relative to the market souring on AI investments as a whole, which would be not great for AMD, but disastrous for Nvidia.

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

#273

Post by Lalabadie »

rhetocj23 wrote: post #250
azan_ wrote: post #218

Earlier quoted context omitted.

Aren’t extremely wealthy people that wealthy due to the valuation of their stock? IIRC generally the higher the networth, the higher share is kept in stocks

Wealthy people are extremely well diversified. Their main risk exposure is to variables that effect the entire market - e.g interest rates.

And they don't spend money, they take debt against their existing assets to fund projects and investments. So long as they can service the loans across economic downturns, they don't particularly have to feel the effects of a recession, outside of the mentioned opportunities to buy the market at a discount.

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

#274

Post by dh2022 »

lucianbr wrote: post #151
churchill wrote: post #47

On the surface, the circular financing seems worrying but once you dig into it, it seems quite benign, tbh. NVIDIA is handing out GPUs into OpenAI, in return for stock/future revenue, whichever way you want to slice it. OpenAI has wonky unit economics, yes, but they're growing at ~100% YoY, so it all checks out, if you ask me.

> wonky unit economics, yes, but they're growing at ~100% YoY Isn't this "losing money on each sale but making it up in volume"? Sounds like I heard that before and it did not turn out well.

That was Amazon's motto in mid to late 90s :). They almost went bankrupt. Now they are ruling retail and cloud.

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

#275

Post by overfeed »

sailfast wrote: post #238
HelloNurse wrote: post #182

Earlier quoted context omitted.

If this means that the fall of OpenAI will cause Oracle and Nvidia to crash and downsize, bubbles aren't completely bad.

Sure who cares if we wipe out 15% of everyone’s retirement right as long as it’s got some schadenfreude involved.

Who's "we"? Most of us have zero say when the backroom circular deals are made.

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

#276

Post by dh2022 »

f1shy wrote: post #115
throwaway2037 wrote: post #109

How are these "circular deals" different than Boeing (and other heavy civilian equipment makers) providing financing on purchases? My point: Is this simply clutching pearls over the AI/LLM bubble, or is there some substance to this concern? And another: How does it compare against the new breed of Bitcoin treasuries, like Strategy (MSTR.OQ)? As I understand, Strategy uses secondary offerings to continuously see more…

This happens also with automotive companies. Peugeot has its own bank, which lends money to people buying peugeots. The big difference: is not circular. The bank is a bank, the OEM building cars build cars. The bank makes money by lending and cashing interest. The car maker by selling for profit. The money goes from bank to OEM, and not the way around, no circle. I do not know the specifics of Boeing though.

Boeing uses Export / Import bank to finance some of its sales:

https://www.exim.gov/news/export-import-bank-united-states-b...

https://www.reuters.com/business/aerospace-defense/us-export...

https://www.cato.org/regulation/fall-2015/us-export-import-b...

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

#277

Post by churchill »

dh2022 wrote: post #274
lucianbr wrote: post #151

Earlier quoted context omitted.

> wonky unit economics, yes, but they're growing at ~100% YoY Isn't this "losing money on each sale but making it up in volume"? Sounds like I heard that before and it did not turn out well.

That was Amazon's motto in mid to late 90s :). They almost went bankrupt. Now they are ruling retail and cloud.

On the contrary, Amazon could have become profitable on demand. They were just investing heavily into physical infrastructure back-to-back and if they ever wanted to slow down or stop, they'd be default alive.

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

#278

Post by overfeed »

Eliezer wrote: post #203
liendolucas wrote: post #178

Earlier quoted context omitted.

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.

Privacy.com won't provide lawyers to you when Oracle sends letters of demand to you for unpaid invoices.

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

#279

Post by dh2022 »

churchill wrote: post #277
dh2022 wrote: post #274

Earlier quoted context omitted.

That was Amazon's motto in mid to late 90s :). They almost went bankrupt. Now they are ruling retail and cloud.

On the contrary, Amazon could have become profitable on demand. They were just investing heavily into physical infrastructure back-to-back and if they ever wanted to slow down or stop, they'd be default alive.

Is more complicated than that.

Walmart back in the 80s investd heavily into physical infrastructure back to back - building new stores, their own trucks fleet. The first retailer with its own satellite communication system. There was never a question about Walmart going bankrupt.

I spent a couple of years in Amazon retail finance. The vendors were incentivized to sell as much as possible, under cost if that helps. Part of my job as financial analyst was to "convince" them it is a bad idea to sell under cost. Very hard and stressful work.

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

#280

Post by xgkickt »

overfeed wrote: post #272
xgkickt wrote: post #269

Earlier quoted context omitted.

Where does that leave AMD, considering OAI are taking a 10% stake?

A shareholder going bust is a no-op. However, the loss of large customer, is concerning, but less so, relative to the market souring on AI investments as a whole, which would be not great for AMD, but disastrous for Nvidia.

They'd just pitch for using the same GPUs to run the digital dollar ledger, and begin the cycle again, maybe.
Post reply on HN