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Circular is a dumb way to describe it IMO, because it's not like both parties end up in the same place. Nvidia is making trades for people to buy their GPUs. Sometimes companies are trading stock for GPUs, sometimes money, other times something else. In summary, Nvidia is selling GPUs.
Circular is a dumb way to describe it IMO, because it's not like both parties end up in the same place. Nvidia is making trades for people to buy their GPUs. Sometimes companies are trading stock for GPUs, sometimes money, other times something else. In summary, Nvidia is selling GPUs.
Circular is a dumb way to describe it IMO, because it's not like both parties end up in the same place. Nvidia is making trades for people to buy their GPUs. Sometimes companies are trading stock for GPUs, sometimes money, other times something else. In summary, Nvidia is selling GPUs.
are you just heavily invested in Nvidia to not see this as problematic?
Circular is a dumb way to describe it IMO, because it's not like both parties end up in the same place. Nvidia is making trades for people to buy their GPUs. Sometimes companies are trading stock for GPUs, sometimes money, other times something else. In summary, Nvidia is selling GPUs.
Nvidia invests, that equity check gets used to secure 10x it in debt with the GPUs as collateral, and then they buy the chips.
Nvidia gets paid, so they don't hold the debt liability. But, if AI revenue doesn't cover those debt payments before the GPUs depreciate, the loop starts to unravel, and fast. CoreWeave, Oracle, all the "neoclouds" etc. will blow up, and there could potentially be a ton of PE debt that is now under-collateralized due to depreciation, causing a pretty big haircut to basically all of private credit.
Circular is a dumb way to describe it IMO, because it's not like both parties end up in the same place. Nvidia is making trades for people to buy their GPUs. Sometimes companies are trading stock for GPUs, sometimes money, other times something else. In summary, Nvidia is selling GPUs.
They're selling GPUs in exchange for scrip which may or may not be able to pay Nvidia's operating expenses depending on whether AI has a profitable business model. This isn't hard to understand.
Nvidia gets real cash, pays TSMC, etc.
The people in real trouble are companies like CoreWeave, Oracle, etc. that took an IOU from OpenAI (for example) to start a buildout, entirely debt financed. It works out so long as demand keeps going up, but the moment the music stops and that debt comes due and there's no revenue to pay it, game over.
Nvidia's concern isn't not actually getting paid, it's being faced with a glut of cheap, depreciated GPUs flooding the market impacting their future revenue. They'll live.
But OpenAI, not being able to pay CoreWeave, for example, that IOU, and then private credit coming for the debt payments from CoreWeave, is what would start the chain reaction. We may actually get to live to see Oracle fall.
Circular is a dumb way to describe it IMO, because it's not like both parties end up in the same place. Nvidia is making trades for people to buy their GPUs. Sometimes companies are trading stock for GPUs, sometimes money, other times something else. In summary, Nvidia is selling GPUs.
Circular is a dumb way to describe it IMO, because it's not like both parties end up in the same place. Nvidia is making trades for people to buy their GPUs. Sometimes companies are trading stock for GPUs, sometimes money, other times something else. In summary, Nvidia is selling GPUs.
These deals give Nvidia more exposure to that, in both directions. Certainly Nvidia shareholders should be cognizant of this. But nothing structurally problematic is occurring here.
At what point do I start taking money out of my VTI holdings and parking it in cash - there is no way the market keeps going up.
At what point do I start taking money out of my VTI holdings and parking it in cash - there is no way the market keeps going up.