Comment by Tuna-Fish

The current state of the market is primarily funneling VC cash to Nvidia. NV is also holding lots of stock in various companies, most of which is probably going to go to zero, but that won't hurt the company in any meaningful way.

After the bubble pops, NV will not be valued anywhere near where it is today, but JHH has put a lot of work in to make sure that at the end of the day, he is not the person holding the bag. At the end of last quarter, the company had 16B more cash in the bank than the sum of their liabilities. All this weird financing is on top of that. If the market collapsed today, and all AI companies stock went to zero, and all existing AI GPUs became worthless overnight, NVidia would take a >$100B accounting loss, but their balance sheet would remain tens of billions on the positive, and on the following quarter they would again be profitable as a gaming GPU manufacturer.

What NV is doing is extracting as much of the VC investment aimed at AI into the company as possible, and preferring to take a portion of the sale price of the GPUs (on which they have 75% gross margins, which is, well, gross, given that it's a physical product that contains a lot of very expensive components that came from third parties) as stock of the company they are selling to in a circular financing deal, just to have the lottery ticket in case the customer wins big.