Note that the Fed has a $6.7tn balance sheet [1]. (This is a silly comparison. But still fun.)
The real comparison: Nvidia's $500+ billion of investments and commitments [2] is substantially more than any easing the Fed has done in the same time [3]. Monetarily, Nvidia is creating a lot of money in our economy.
The good news: I have seen no evidence Nvidia has borrowed against its stock or otherwise linked its equity value to these commitments. Its stock could crash without causing–as long as its cash flows continue–a credit crisis through its investments and commitments.
I've always found it interesting when corporations start acting like public institutions. When traditionally philosophical, social contract ideas apply to things like corporate governance. Or like here, where private structures get powerful and important enough to resemble government structures.
The ideas we deal with when we discuss society and organization aren't exclusive to government, they relate to human nature in general. I wonder if in the future we will have more discussion of power and how to organize it in corporations, similar to what we discuss today about government.
show comments
thrownawaysz
I wonder when they will give up on the gaming market because that could take down several publishers and developers. I really don't think it's an if question but a when because it almost feels like an afterthought at this point (they removed the standalone gaming revenue report from the financial reports this summer). Also I don't think AMD and Intel is capable "to step in" to replace them.
show comments
anu7df
Cracks are starting to appear. Open Ai and Anthropic are publicly asking for slowdown in AI research. Translation: We see this technology not being any more useful than what it is now, no AGI is coming, and the first one to accept this and slow down the dollar burn rate will incur the wrath of the market. So let's say this big boogey man technology will end all life on earth and we all slow down together. Bonus points if we can lobby for this to be included in the national security bucket. Then US govt can bail us out. Yay!
If Nvidia is the bank, they should be starting to sweat a bit. It's not often companies ask for a voluntary slowdown.
>Nvidia’s financial engineering is partly a response to its biggest customers’ transformation into rivals. “Hyperscalers”, tech giants such as Amazon, Google, Meta and Microsoft, account for roughly half of Nvidia’s revenue
Companies just don't want to pay Jensen's tax. Hyperscalers might still pay Jensen's tax for LLM training but for inference. you don't have to. they are also betting on their own chip for training to replace Nvidia.
this is Nvidia panicking and doing vendor fiance to Neoclouds and buying Hugging Face. even none hyperscalers like Meta is betting on its own chip for AI inference.
vannevar
It would be more accurate to say Nvidia is the central bank of data center projects. The vast majority of capex associated with AI is for data centers, not the actual technology. Nvidia needs to create data center projects to sell to, hence its role in financing them.
vayup
I am a bit confused at people looking at this negatively. If Nvidia believes AI demand is extraordinarily high, and that it requires a large capital outlay to serve that capital, isn't this what they should be doing?
epsteingpt
This is a good headline and point.
Realistically, they're worse than a central bank, because they can't exactly expand supply monotonically like a normal central bank. Nor do they realistically control rates.
treebeard901
The Japanese economy and yen carry trade is a close second.Rising oul prices and reduced output due to the conflicts in the Middle East could filter through to increasing yields on Japanese debt. In turn, the yen interventions have to continue to keep it lower than 160, which seems to be the psychological barrier for the yen carry trade.
show comments
anthonybourdain
Okay, but at some point these investments need to start turning profits; the financing NVDA has arranged is temporary, and private credit needs returns at some point. The overinvestment in AI will lead to a downturn in the capital cycle.
cmiles8
Because vendor financing in tech to keep a bubble going never ended badly.
Sadly it seems like some haven’t watched the end of the last movie on this subject.
show comments
pwillia7
Should there be a LIBOR for 1GB VRAM set each morning?
show comments
vkaku
Market correction will happen. Banks go down and close during recessions. Hope these people are wise enough to see through these effects.
anana_
I'm curious what the actual rate of replacement/useful life of these GPUs running AI inference 24/7 is.
If these cards burn out in less than the ~5 years of depreciation that accounting puts them at, well then there will be problems.
show comments
gz5
Interesting juxtaposition with Dario's/Anthropic's 'we must pace the frontier' missive today
show comments
SleightOfHand
More like investors/AWS right?
Funding companies under the condition that they use their infra.
Also called: Buying customers.
I thought a central bank would be like: China is the world's largest official creditor and holds the highest foreign exchange reserves.
That's what makes you a naturally forming central bank.
amelius
And what is TSMC in this analogy?
show comments
Founderarcstone
yes, and Jensen is the fed char!
timedude
Being the central bank of anything is certainly not a compliment. I'd take it as an insult
shevy-java
Nvidia owes us money.
jonplackett
Weird to think we are currently living in the ‘unlimited free Ubers because you recommended a friend or 2’ phase of this new technology.
Imagine if running fable costs you what it actually costs to run fable. A lot of vibe coders (and just proper software engineers) are gonna be very sad if that comes to pass.
show comments
roschdal
Nvidia will quake the stock market.
u1hcw9nx
If Nvidia is a bank, it's an Islamic Bank. They don't take interest (usury), they share profits and risk.
Imagine a scenario where the AI bubble bursts and AI companies and neoclouds go bankrupt en masse, and then a huge rebound occurs when AI has a delayed takeoff. Nvidia ends up with a massive amount of compute on its hands from its backstop deals, and it also owns assets from failed companies when profits start to grow. New startups running using Hugging take the place of OpenAI and Anthropic when their compute assets are divided between survivors like Nvidia, Microsoft, Alphabet, Meta.
If/when there is an AI crash, any number of small startups can buy compute for the price of electricity without anyone wanting to buy them. That is when the real innovation happens. The top of the hype cycle is usually more about getting rich quick and buying and shutting down competition.
show comments
ernsheong
Lol the page doesn't even scroll
alexpadula
Paywall?
show comments
Mistletoe
How many top signals like this article do you need to see before you exit the market?
> worth around $5.4trn
Note that the Fed has a $6.7tn balance sheet [1]. (This is a silly comparison. But still fun.)
The real comparison: Nvidia's $500+ billion of investments and commitments [2] is substantially more than any easing the Fed has done in the same time [3]. Monetarily, Nvidia is creating a lot of money in our economy.
The good news: I have seen no evidence Nvidia has borrowed against its stock or otherwise linked its equity value to these commitments. Its stock could crash without causing–as long as its cash flows continue–a credit crisis through its investments and commitments.
[1] https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
[2] https://www.sec.gov/Archives/edgar/data/1045810/000104581026...
[3] https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
I've always found it interesting when corporations start acting like public institutions. When traditionally philosophical, social contract ideas apply to things like corporate governance. Or like here, where private structures get powerful and important enough to resemble government structures.
The ideas we deal with when we discuss society and organization aren't exclusive to government, they relate to human nature in general. I wonder if in the future we will have more discussion of power and how to organize it in corporations, similar to what we discuss today about government.
I wonder when they will give up on the gaming market because that could take down several publishers and developers. I really don't think it's an if question but a when because it almost feels like an afterthought at this point (they removed the standalone gaming revenue report from the financial reports this summer). Also I don't think AMD and Intel is capable "to step in" to replace them.
Cracks are starting to appear. Open Ai and Anthropic are publicly asking for slowdown in AI research. Translation: We see this technology not being any more useful than what it is now, no AGI is coming, and the first one to accept this and slow down the dollar burn rate will incur the wrath of the market. So let's say this big boogey man technology will end all life on earth and we all slow down together. Bonus points if we can lobby for this to be included in the national security bucket. Then US govt can bail us out. Yay!
If Nvidia is the bank, they should be starting to sweat a bit. It's not often companies ask for a voluntary slowdown.
Archive: http://archive.today/kt50V
>Nvidia’s financial engineering is partly a response to its biggest customers’ transformation into rivals. “Hyperscalers”, tech giants such as Amazon, Google, Meta and Microsoft, account for roughly half of Nvidia’s revenue
Companies just don't want to pay Jensen's tax. Hyperscalers might still pay Jensen's tax for LLM training but for inference. you don't have to. they are also betting on their own chip for training to replace Nvidia.
this is Nvidia panicking and doing vendor fiance to Neoclouds and buying Hugging Face. even none hyperscalers like Meta is betting on its own chip for AI inference.
It would be more accurate to say Nvidia is the central bank of data center projects. The vast majority of capex associated with AI is for data centers, not the actual technology. Nvidia needs to create data center projects to sell to, hence its role in financing them.
I am a bit confused at people looking at this negatively. If Nvidia believes AI demand is extraordinarily high, and that it requires a large capital outlay to serve that capital, isn't this what they should be doing?
This is a good headline and point.
Realistically, they're worse than a central bank, because they can't exactly expand supply monotonically like a normal central bank. Nor do they realistically control rates.
The Japanese economy and yen carry trade is a close second.Rising oul prices and reduced output due to the conflicts in the Middle East could filter through to increasing yields on Japanese debt. In turn, the yen interventions have to continue to keep it lower than 160, which seems to be the psychological barrier for the yen carry trade.
Okay, but at some point these investments need to start turning profits; the financing NVDA has arranged is temporary, and private credit needs returns at some point. The overinvestment in AI will lead to a downturn in the capital cycle.
Because vendor financing in tech to keep a bubble going never ended badly.
Sadly it seems like some haven’t watched the end of the last movie on this subject.
Should there be a LIBOR for 1GB VRAM set each morning?
Market correction will happen. Banks go down and close during recessions. Hope these people are wise enough to see through these effects.
I'm curious what the actual rate of replacement/useful life of these GPUs running AI inference 24/7 is.
If these cards burn out in less than the ~5 years of depreciation that accounting puts them at, well then there will be problems.
Interesting juxtaposition with Dario's/Anthropic's 'we must pace the frontier' missive today
More like investors/AWS right?
Funding companies under the condition that they use their infra.
Also called: Buying customers.
I thought a central bank would be like: China is the world's largest official creditor and holds the highest foreign exchange reserves.
That's what makes you a naturally forming central bank.
And what is TSMC in this analogy?
yes, and Jensen is the fed char!
Being the central bank of anything is certainly not a compliment. I'd take it as an insult
Nvidia owes us money.
Weird to think we are currently living in the ‘unlimited free Ubers because you recommended a friend or 2’ phase of this new technology.
Imagine if running fable costs you what it actually costs to run fable. A lot of vibe coders (and just proper software engineers) are gonna be very sad if that comes to pass.
Nvidia will quake the stock market.
If Nvidia is a bank, it's an Islamic Bank. They don't take interest (usury), they share profits and risk.
https://en.wikipedia.org/wiki/Islamic_banking_and_finance
Imagine a scenario where the AI bubble bursts and AI companies and neoclouds go bankrupt en masse, and then a huge rebound occurs when AI has a delayed takeoff. Nvidia ends up with a massive amount of compute on its hands from its backstop deals, and it also owns assets from failed companies when profits start to grow. New startups running using Hugging take the place of OpenAI and Anthropic when their compute assets are divided between survivors like Nvidia, Microsoft, Alphabet, Meta.
If/when there is an AI crash, any number of small startups can buy compute for the price of electricity without anyone wanting to buy them. That is when the real innovation happens. The top of the hype cycle is usually more about getting rich quick and buying and shutting down competition.
Lol the page doesn't even scroll
Paywall?
How many top signals like this article do you need to see before you exit the market?
Let’s look to the past:
https://www.history.com/articles/1929-stock-market-crash-war...
hardware? yes Nvidia is software? Google is. AI = Data Data = Google