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OpenAI and Nvidia announce partnership to deploy 10GW of Nvidia systems

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Re: OpenAI and Nvidia announce partnership to deploy 10GW of Nvidia systems

#351

Post by phh »

crowcroft wrote: post #306
JCM9 wrote: post #108

This is throwing more cards on the house of cards. Nvidia is “investing” in OpenAI so OpenAI can buy GPUs from NVidia. Textbook “round tripping.” I generally like what’s been happening with AI but man this is gonna crash hard when reality sets in. We’re reaching the scary stage of a bubble where folks are forced to throw more and more cash on the fire to keep it going with no clear path to ever get that cash back. If…

It seems similar to how GE under Jack Welch would use their rock solid financials to take on low cost debt that they could lend out to suppliers who needed finance to purchase their products. The biggest difference here though is that most of these moves seem to to involve direct investment and the movement of equity, not debt . I think this is an important distinction, because if things take a downturn debt is highl…

Except I'm guessing they are not selling their equity, they are making debt backed by their equity?

Re: OpenAI and Nvidia announce partnership to deploy 10GW of Nvidia systems

#352

Post by sssilver »

binarymax wrote: post #337
lacy_tinpot wrote: post #328

Earlier quoted context omitted.

This is more like reinvesting into the business as it's growing. It's a positive sum loop. Nvidia makes money by selling to OpenAI. OpenAI makes money by selling a service to users that uses Nvidia. So Nvidia invests in the build out and expansion of the infrastructure that will use Nvidia. This is a classic positive sum loop. It's not that different than a company reinvesting revenue in growing the company.

But is OpenAI recouping this? I remember seeing reports a year ago that it was in the realm of $700M/mo in inference costs for them - are they earning that now? Of course the strategy of taking a loss and reinvesting - but I don't see how OpenAI is making enough money to pay for all this, now or in the future.

How would you "see" that, given that OpenAI isn't public?

Re: OpenAI and Nvidia announce partnership to deploy 10GW of Nvidia systems

#353

Post by gpm »

HarHarVeryFunny wrote: post #272
labrador wrote: post #131

For scale: The 1960's era US Navy submarine I served on had a 78MW reactor, so 10GW is 128 nuclear submarines

A big power station of any type is ~1GW. Nuclear is slow to build, so I'd have to guess natural gas.

The US is adding significantly more solar, and slightly more wind, than natural gas every year. This doesn't have to be placed where people already are, but can be placed where energy is the cheapest, which favours solar and wind substantially more than gas (or nuclear).

The reasonable (cost effective, can be done quickly) thing to do is put this wherever you can generate solar + wind the most reliably, build out a giant battery bank, and use the grid as a backup generator. Over time build a better and better connection to the grid to sell excess energy.

Re: OpenAI and Nvidia announce partnership to deploy 10GW of Nvidia systems

#354

Post by theptip »

wongarsu wrote: post #204
vessenes wrote: post #177

Earlier quoted context omitted.

Yeah the path forward here is going to be Apple-like vertical supply chain integration. There is absolutely no spare capacity in the infra side of electrical right now, at least in the US.

And there is great cost saving potential in vertical integration. Distribution and transmission are huge costs. If you can build a data center right next to a power plant and just take all their power you get much better prices. Not trivial to do with the kinds of bursty loads that seem typical of AI data centers, but if you can engineer your way to a steady load (or at least steady enough that traditional grid smoot…

> bursty loads that seem typical of AI data centers

Don’t datacenters want to run at their rated capacity 24/7?

Re: OpenAI and Nvidia announce partnership to deploy 10GW of Nvidia systems

#355

Post by FrankyHollywood »

$100 billion, what a number. It makes me a bit cynical. The amount of useful developments you could finance in either clean energy, education, nature preservation, medicine, anything.

But no, let's build us a slightly better code generator.

Strange times we live in...

Re: OpenAI and Nvidia announce partnership to deploy 10GW of Nvidia systems

#356

Post by rapsey »

thfuran wrote: post #290
rapsey wrote: post #286

Earlier quoted context omitted.

People are quite bearish and the stock market is making all time highs. This is actually a very good sign, because we are far from any euphoria. Always keep in mind the old saying: pesimists get to be right and optimists get to be rich.

Only if they're optimistic at the right time and not the wrong one.

Timing the market is a fallacy. Time in the market is what builds wealth.

Re: OpenAI and Nvidia announce partnership to deploy 10GW of Nvidia systems

#357

Post by empath75 »

mgh95 wrote: post #283
radu_floricica wrote: post #263

Earlier quoted context omitted.

But real GPUs are being built, installed and used. It's not paper money, it's just buying goods and services partly with stock. Which is a very solid and time honored tradition which happens to align incentives very well.

What revenues do these GPUs generate for OpenAI? OpenAI is not currently profitable, and it is unclear if its business model will ever becomes profitable -- let alone profitable enough to justify this investment. Currently, this only works because the markets are willing to lend and let NVIDIA issue stock to cover the costs to manufacture the GPUs. That's where the belief that we are in a bubble comes from.

Amazon lost money every year for the first 9 years of it's existence and people said it was a bubble the entire time.

Re: OpenAI and Nvidia announce partnership to deploy 10GW of Nvidia systems

#358

Post by stale2002 »

raincole wrote: post #331
stale2002 wrote: post #215

Earlier quoted context omitted.

Does anyone in the finance business know how legal this all it? I am hearing terms like "round tripping" being thrown around. A practice where a company sells and buys back its own product to artificially inflate revenue. I'm asking because its not just OpenAI that they are apparently doing this with, instead its with multiple other major GPU providers, like Coreweave. And its just being done all out in the open? How…

First of all, it's not 'textbook round tripping' at all. The parent commenter is dead wrong but HNers upvote when they see "AI is a bubble." Textbook round tripping is like: OpenAI buys GPUs from Nvidia. And the only reason it buys these GPUs is to resell it back to Nvidia, or just do nothing. It doesn't make it round tripping just because OpenAI is taking investment and buying stuff from Nvidia at the same time. Unl…

Its not just about OpenAI, though. Even though they have the biggest/flashiest deal. The other more obvious example is coreweave.

> OpenAI buys GPUs from Nvidia. And the only reason it buys these GPUs is to resell it back to Nvidia

Funny you should say this. Nvidia having those GPUs be rented back to them is also something thats happening.

https://www.kerrisdalecap.com/wp-content/uploads/2025/09/Ker...

"As detailed by The Information, in early 2023 Nvidia invested $100 million in equity and signed a $1.3 billion rental agreement through 2027, under which it rents back GPUs from CoreWeave to support internal R&D and its DGX cloud offering."

"CoreWeave is not the only neocloud to benefit from Nvidia’s strategic support. Nvidia has actively supported an ecosystem of emerging AI infrastructure providers – including Lambda, Nebius, and Applied Digital –"

They are quite literally buying GPUs only to rent them right back to Nvidia.

And these are just the public deals. Is Nvidia systematically selling GPUs and having them be rented back to, by every major GPU cloud providers?

https://www.investing.com/analysis/coreweave-nvidia-partners...

"This deep alliance culminates in the new $6.3 billion agreement. The deal’s most critical component is a strategic commitment from NVIDIA to purchase any of CoreWeave’s unsold cloud computing capacity through April 2032"

Re: OpenAI and Nvidia announce partnership to deploy 10GW of Nvidia systems

#359

Post by AlexandrB »

sindriava wrote: post #291
lawlessone wrote: post #224

Earlier quoted context omitted.

any examples?

Current systems are already tremendously useful in the medical field. And I'm not talking about your doctor asking ChatGPT random shit, I'm saying radiology results processing, patient monitoring, monitoring of medication studies... The list goes on. Not to mention many of the research advances done using automated systems already, for example for weather forecasting.

I'm getting real "put everything on the blockchain" vibes from answers like this. I remember when folks were telling me that hospitals were going to put patient records on the blockchain. As for radiology, it doesn't seem this use of AI is as much of a "slam dunk" as it first appeared[1][2]. We'll see, I guess.

Right now I kind of land on the side of "Where is all the shovelware?". If AI is such a huge productivity boost for developers, where is all the software those developers are supposedly writing[3]? But this is just a microcosm of a bigger question. Almost all the economic growth since the AI boom started has been in AI companies. If AI is revolutionizing multiple fields, why aren't relevant companies those fields also growing at above-expected rates? Where's all this productivity that AI is supposedly unlocking?

[1] https://hms.harvard.edu/news/does-ai-help-or-hurt-human-radi...

[2] https://www.ajronline.org/doi/10.2214/AJR.24.31493

[3] https://mikelovesrobots.substack.com/p/wheres-the-shovelware...

Re: OpenAI and Nvidia announce partnership to deploy 10GW of Nvidia systems

#360

Post by xyst »

This is awful. You should know the private companies building these datacenters often get back door deals with PUCs. They do NOT pay their fair share in their consumption and the extra cost is shouldered onto the general rate payers.

More degenerate "privatizing of the profits, socializing the profits" behavior. American public continues to get bent by billionaires and continue to elect folks that will gladly lube them up in preparation of that event.

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