Why is Nvidia financing neoclouds to buy Nvidia chips to rent to AI customers? At least it was my understanding that run their own DCs for GeForce Now for example
We did but people simply keep pretending it’s not happening.
Between the circular financing and behaviour some analysts call “channel-stuffing”, it does seem that with Jensen Huang gone, the music is perhaps about to stop.
As a result they never seriously pursued frontier research for open models - which could have easily absorbed any excess compute they planned for.
On the other side their customers are rapidly becoming their competitors and will happily eat up spare capacity at TSMC if nvidia can’t fulfill its obligations.
To be fair their Nemotron models are pretty good. The Parakeet speech-to-text model is also pretty good. That being said these pale in comparison to the frontier labs. They should've invested more into it, but I understand that they don't want to piss off their biggest competitors.
Even if NVidia crashed and there ends up being an oversupply of GPUs or TSMC fab slots, this doesn't change that OpenAi and Google still need memory for their own hardware accelerators, so the price of boards wouldn't go down by much
Part of me wonders (maybe naively) if with falling cost of AI inference and improvement of models means there is an oversupply of inference infrastructure. since we may reach a point where no one needs more and everything you could want can be done by the machine and adding more compute for most users is not any kind of benefit (like it was before LLMs there was an obvious ceiling where the majority of people did not need more compute).
I know Jevons paradox is a thing and I could see it going the other way as well but the first possibility seems to be ignored and I am not sure we can. Eventually demand for training might dry up as well if are models become largely very good and only a bit of fine tuning is required for most applications.
I mean, preventing bubbles is literally the reason short sellers are allowed to exist. When they see a stock that is overpriced, they help it correct. Innocent people lost a lot of money on Enron.
Depends, you buy a used server off of eBay or 3d print your own fan shroud. Waiting for prices to drop some and then I’m looking to build my own rack in the basement, so I can use open weight models and not directly support horrible data center practices.
Not for gaming they don't have monitor outputs and most of them aren't even in a standard PCI-E format. Some of them might be useful as a home AI accelerator with adapters and jerry rigged cooling.
Surely this is Nvidia deploying excess capital by acquiring equity in high growth companies at significant discounts (factor in that a major portion of the investment comes back to them against their high margin products). This isn't a new business concept and is generally accepted as smart business? Not some breaking news conspiracy?
From WSJ below. Seems clear they went too far. But not clear Kress can navigate this.
Over the course of the meeting, he proceeded to tear into the woman who is now taking over for him as Nvidia CEO.
Colette Kress was "a deer in the headlights," he said, interrupting her presentation, according to a person familiar with the comments.
He had summoned Kress and his senior finance team to diagnose a ballooning problem: Nvidia was in talks to provide billions of dollars of guarantees to companies that couldn't afford its chips. That included deals led by Huang's son-in-law, Nico Caprez, who had been offering upstart cloud providers and data-center developers financing in the hopes of turning them into long-term customers.
Huang had launched a dealmaking spree and was now starting to question whether it had gone too far, according to people familiar with the matter.
Kress was a "reporting CFO," not someone who could help him define a strategy or make decisions, Huang said during the August meeting.
Well that's actually a hopeful sign for the future. I was a bit worried hearing she'd been conservative about investments in the past... but if the conservatism was about vaguely fraudulent circular financing deals we'll all be better off.
32 comments:
I thought we knew a year ago that nVidia was doing circular finance?
https://www.theguardian.com/technology/2025/dec/28/nvidia-in...
Why is Nvidia financing neoclouds to buy Nvidia chips to rent to AI customers? At least it was my understanding that run their own DCs for GeForce Now for example
Most bubbles you see coming from a mile away. You just don't know how many miles away the actual pop is.
Yep. Slowly and all at once.
People pointed it out as early as 2023...
We did but people simply keep pretending it’s not happening.
Between the circular financing and behaviour some analysts call “channel-stuffing”, it does seem that with Jensen Huang gone, the music is perhaps about to stop.
There is no concrete evidence of this.
Jensen & Nvidia were never AGI / ASI pilled.
As a result they never seriously pursued frontier research for open models - which could have easily absorbed any excess compute they planned for.
On the other side their customers are rapidly becoming their competitors and will happily eat up spare capacity at TSMC if nvidia can’t fulfill its obligations.
To be fair their Nemotron models are pretty good. The Parakeet speech-to-text model is also pretty good. That being said these pale in comparison to the frontier labs. They should've invested more into it, but I understand that they don't want to piss off their biggest competitors.
hopefully prices come tumbling down, I need a decent GPU stuck with crap at the moment.
Given that is a sentiment I hear, and feel, a lot, it's unlikely the prices will come down much. It seems there is a lot of demand at lower prices.
80-series at MSRP would probably make people happy, though it's more than I'm willing to spend for gaming myself.
Even if NVidia crashed and there ends up being an oversupply of GPUs or TSMC fab slots, this doesn't change that OpenAi and Google still need memory for their own hardware accelerators, so the price of boards wouldn't go down by much
Part of me wonders (maybe naively) if with falling cost of AI inference and improvement of models means there is an oversupply of inference infrastructure. since we may reach a point where no one needs more and everything you could want can be done by the machine and adding more compute for most users is not any kind of benefit (like it was before LLMs there was an obvious ceiling where the majority of people did not need more compute).
I know Jevons paradox is a thing and I could see it going the other way as well but the first possibility seems to be ignored and I am not sure we can. Eventually demand for training might dry up as well if are models become largely very good and only a bit of fine tuning is required for most applications.
A WSJ article filtered through a gaming enthusiast website filtered through a general tech enthusiast website.
Here’s the original article: https://www.wsj.com/tech/jensen-huang-colette-kress-nvidia-c...?
At this point, I am eagerly waiting for this AI song-and-dance to collapse so that I ( and my employer too) can purchase a decent specs system again.
I thought we knew this already? Seems like some nice info is being redrummed up.
I imagine the shortsellers and put option holders like that.
I mean, preventing bubbles is literally the reason short sellers are allowed to exist. When they see a stock that is overpriced, they help it correct. Innocent people lost a lot of money on Enron.
so if this is true... we should finally get some gpus right?
After previous bubbles there was a lot of excess equipment to be purchased.
The GPUs going in datacenters are not usable at home right?
Depends, you buy a used server off of eBay or 3d print your own fan shroud. Waiting for prices to drop some and then I’m looking to build my own rack in the basement, so I can use open weight models and not directly support horrible data center practices.
Not for gaming they don't have monitor outputs and most of them aren't even in a standard PCI-E format. Some of them might be useful as a home AI accelerator with adapters and jerry rigged cooling.
I have MI50 32GB server cards at home with mounted blowers and I can use them for gaming.
Surely this is Nvidia deploying excess capital by acquiring equity in high growth companies at significant discounts (factor in that a major portion of the investment comes back to them against their high margin products). This isn't a new business concept and is generally accepted as smart business? Not some breaking news conspiracy?
> CFO and acting CEO, Colette Kress ... pushed for a reduction in circular financing agreements,
Reducing circular financing agreements seems like ... a good idea?
> in response to which Huang allegedly lay into Kress, calling her a "deer in the headlights,"
From WSJ below. Seems clear they went too far. But not clear Kress can navigate this.
Over the course of the meeting, he proceeded to tear into the woman who is now taking over for him as Nvidia CEO.
Colette Kress was "a deer in the headlights," he said, interrupting her presentation, according to a person familiar with the comments.
He had summoned Kress and his senior finance team to diagnose a ballooning problem: Nvidia was in talks to provide billions of dollars of guarantees to companies that couldn't afford its chips. That included deals led by Huang's son-in-law, Nico Caprez, who had been offering upstart cloud providers and data-center developers financing in the hopes of turning them into long-term customers.
Huang had launched a dealmaking spree and was now starting to question whether it had gone too far, according to people familiar with the matter.
Kress was a "reporting CFO," not someone who could help him define a strategy or make decisions, Huang said during the August meeting.
this is the new off balance sheet transaction
I’m so ready this time, CFO at the helm
This isn't responsive to GP's remarks.
> a major portion of the investment comes back to them
1. circular financing agreements
2. see 1
Well that's actually a hopeful sign for the future. I was a bit worried hearing she'd been conservative about investments in the past... but if the conservatism was about vaguely fraudulent circular financing deals we'll all be better off.
Spot on. Maybe that implies some correction of some sort. Especially to their stock and to the beneficiaries of this circular financing.
I also feel this is a good thing. Looks like the elephants in the room are being addressed.