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.
“as long as it’s cash flow
continues” is doing a lot of optimistic heavy lifting. The whole premise of the circular financing worry is that Nvidia sits in the middle of all the guarantees made to companies like OpenAI. If any of those companies become insolvent, Nvidia is on the hook for it.
Also Nvidia isn’t really creating money. The 500B number is third party capital that already exists (BX, Apollo, etc).
> “as long as it’s cash flow continues” is doing a lot of optimistic heavy lifting
It's not. It's stating a condition. For traditional banks, a stock crash can independently trigger a failure.
> whole premise of the circular financing worry is that Nvidia sits in the middle of all the guarantees made to companies like OpenAI. If any of those companies become insolvent, Nvidia is on the hook for it
Sorry, I meant revenues. If Nvidia's revenues stay stable, these commitments aren't a problem. Even if the stock price crashes.
> Nvidia isn’t really creating money
It absolutely is. Similar to the way banks create money [1]. The commitments support credit that wouldn't exist without it.
It would also follow that by increasing the money supply significantly they’re also contributing to inflation a great deal correct? (Given the rest of the economy is not growing at near the same rate as the AI industry)
Maybe a dumb question but how is NVIDIA increasing the total supply of money? Only the fed can actually order more money to be "created". Private companies can only work within the existing supply, that is, their reserves, no?
Regardless of NVIDIA and LLM/AI, the claim that inflation is caused directly, or without-fail, by an increase in money supply - is not well founded. A significant money supply increase may very well have a tiny or possibly even negative price-increasing impact - depending on how money is supplied, to which elements and under what conditions.
Key difference is that these loans, which do increase the money supply and create inflation, are on average productive and profitable and thus deflationary. Quantitative easing is just printing money and often goes towards repaying bad debts, which are unproductive and thus not deflationary, so the inflation (increase in money supply) does not outweigh the deflation (creating of goods)
> The good news: I have seen no evidence Nvidia has borrowed against its stock or otherwise linked its equity value to these commitments.
Nvidia doesn't need it. It funds other companies. They do this thing that Nvidia doesn't do. It shows up on their balance sheets and Nvidia just gets to claim the valuation of the investment on its balance sheet.
> that’s a pretty load-bearing as long as its cash flows continue. The two things are surely correlated
It's an important difference. In the GFC, the value of AAA-rated tranches fell. With the benefit of hindsight, we know they continued paying. They were directly leveraged, however, so mark-to-market losses caused firms to fail.
Nvidia stock crashing shouldn't have a similar effect to these commitments. If someone else has massively levered their Nvidia position, they'll obviously blow up. But Nvidia could survive a good deal of equity-market tumult in a way a bank could not.
Related but in specific ways. Stock is often priced in anticipation of growth. If NVDA could meet its credit obligations while its real profit stayed flat, the two would diverge, at least for awhile. A large amount of NVDA’s current cash flow is likely purchase contracts with a fixed multi-year term, which further smooths out the impact of, say, a stock crash following a couple of quarters of terrible earnings.
Now, whether many things NVDA has invested in with expectation of repayment or earnings would be able to repay or appreciate in a market environment where Nvidia’s stock was crashing? That’s another question entirely.
"Uh, that’s a pretty load-bearing as long as its cash flows continue. The two things are surely correlated."
Ppl have made the prediction of it being a bubble or unsustainable since 2022. At this point, it's hard to say these people have credibility anymore. Ai is big enough, much like Google in 2005 or Facebook/Social Network in 2010 or apps in 2015, that it's an institution unto itself. It's not going to just crash as so many are expecting and have been wrong the past 4 years about.
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.
Well the key difference making any superficial similarities fall apart is Nvidia does not have neutral economy-wide goals of maintaining small+stable inflation, near-full employment and stabilizing financial institutions like the Fed does. Nvidia is entirely self interested in protecting their own shareholder value (that includes the incestuous web of investments ultimately ending up spent on their GPUs).
The structure of the Fed is setup the way it is to limit the sort of self-serving, myopic political micromanaging that could be damaging to the economy at large. And, unlike a beneficiary of rapid growth like Nvidia, has (historically) tried to identify potential indicators warning of unsustainable bubbles that could lead to financial contagion and tries to mitigate that risk using the limited monetary tools available and their public soapbox.
A similar decision making structure would potentially be very undesirable to Nvidia shareholders as caution over long time horizons would likely produce what they would consider an excessively conservative, defensive strategy to avoid putting too much air into the bubble too quickly (at the expense of their valuation).
Corporations certainly don't have the same goals government does, but human nature applies universally.
I'm not saying that corporations should have exactly the same rules and structure as government does, but perhaps many of the ideas used to design governments can be borrowed.
In a country without religion, banner or ideology to unite the people in current-and-coming turbulent times, the bet is made on "unite under money, or have no money left"
the way to fight it is to be principled even in front of cheaper options - and to support others like you
The American Revolution was very much a discussion about power. Of course, it wasn't just a discussion (we had to fight a war to defend the new form of government), but it was driven by the same concerns about the distribution of power.
Yeah its soooo interesting! Totally not dystopian, just soooo interesting and fascinating to ponder these scenarios in which corporations hold equal power to national governments!
Just such a curious scenario to let your mind wander about, how society would look like in these scenarios!
/s
I'm honestly so sick of the suspense of disbelief on this site, how is this more "interesting" to you, than the absolute sheer terror you should feel about going back to feudalism and serfdom? A typical western national state ensures that you have basic rights as a human being and aren't exploited to the death by non-government entities.
I'm not advocating for corporations to have equal power with governments, though. I think that's generally a terrible idea.
Looking at any organization with power and people involved, perhaps we can use the same ideas that traditionally apply to government in more places. That's all I'm saying.
This is not some mindless intellectual exercise to distract from how things are. In fact, as a proposal for how to reform corporate power, it's the opposite.
(Also, even though I think corporate power should be limited to a very specific arm of society, and that we shouldn't encourage more corporate power, you are greatly exaggerating. Feudalism and the abolition of human rights are not right around the corner.)
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.
AMD would step in, they where behind nvidia but they've been closing that gap for a while and the 9070XT is the current value king (in this fucked up market) for mid-high gaming and you can actually buy them.
Demand for Nvidia cards has outstripped supply even on the mid-high cards specifically because they do better with local models than AMD cards with the same VRAM do broadly.
AI has completely broken the PC gaming market (and PC/Laptop market more broadly but gaming is really hit hard because it's the exact components that matter for both that overlap).
Nvidia had the mind share among gamers but so did Intel once, inertia only lasts so long they've been thoroughly intent on burning that to the ground for a while, back to the post 1080's
If RDNA5 is good (and 4 was it closed the gap on RT) they'll been in a solid place to take the spot if Nvidia do cede the ground.
I have a 7900XTX the last flagship card AMD did (about equal to a 9070XT for raster but 24GB VRAM not 16GB) and it has been and is a stellar card for gaming (let down only if you care about RT and the games I play don't have it).
Flawless under Linux, weaker on the AI behind nvidia but it runs Qwen surprisingly well and I didn't and don't care too much about that except to poke it occasionally.
Cryptocurrency mining had it broken before that. PC gaming's golden years are behind us, as AI, even if not LLMs, seems like it's not going away, so the gaming market is now the niche hobby while AI takes center stage.
RIP. My first gaming ~GPU~ (we called them 3d accelerators back then) was a Diamond Monster II with a 3dfx Voodoo 2 chip.
> Also I don't think AMD and Intel is capable "to step in" to replace them.
It's kind of weird. nVidia kind of has the PC market cornered, but AMD has had the last couple of generations of Xbox and Playstation. Also, they power the Steam Deck/Machine, and Valve has been contributing a lot of AMD graphics features into the Linux drivers. There is a world where AMD (and maybe even Linux on AMD specifically) becomes the de facto standard for gaming.
Maybe this is silly of me, but maybe gaming would enjoy an era of hardware upgrades being rather unviable so the focus turns to optimization and aesthetic.
The thing is really that even entry level gaming is getting expensive. I was considering building a pc and everything is expensive, I was going to replace the disk of my ps4 thag I bought used for 100$ and the 1tb ssd costs 150$
It will be interesting times but I don't think anyone will enjoy a plateau because it's expensive. Even replacing existing hardware is expensive now. Hardly enjoyabe.
A retraction from the gaming market wouldn't necessarily mean they'd still even produce the current crop of products. I could (and I would argue would) involve a complete shuttering of the GeForce brand, halting current production. On the assumption that Intel and AMD would follow, that wouldn't be an end of upgrades, but an end to the market.
It’s not silly. games use far more hardware than they really need. It also pushes out release dates of aggressive console schedules like ps6 because even if it’s a massive upgrade and you have IP locked into your console, no one is going to pay $4000 to play a game like wolverine.
> I really don't think it's an if question but a when because it almost feels like an afterthought
I feel your reasoning is very weird. Are they losing money by selling consumer GPU? Just because the profit isn't that much compared to AI it doesn't mean that it's negative, and for-profit companies are not known for leaving money on the table. Apple doesn't reveal how much Apple TV+ makes for them either but I don't see it be gone anytime soon.
NVidia is limited by the number of chips they can produce.
If you can fab 1000 chips, and can sell some for $500 and some for $80000 what are you going to do?
The game GPU is at once profitable, but causes them to give up far more profits than they're gaining from it.
They're maintaining the game market to have multiple markets and not go all in, but it's strategic hedging at this point. When NVidia makes a gaming GPU instead of a data center GPU they are leaving money on the table in the short term since they're constrained at the fab level.
Which is distinctly different both in purpose and technology than the previous versions. DLSS 5 is no longer about frame improvements. It’s about increasing graphical fidelity with active AI rendering.
DLSS 5 is trying to relight and retexture the scene using AI. DLSS 4 is just trying to take a lower quality image and upscale it using AI
Nvidia is limited by the number of engineers they have. It might turn out that the AI market is so lucrative that it’s best to reallocate their gaming-focused engineers to AI.
Apple TV is at least a growth market for them, whereas gaming is sort of capped and clearly a tiny piece of nvidia’s revenue atm.
That seems a bit overzealous, most consoles[0] run on AMD chips today.
Both PS 5 and Xbox are based on AMD APUs and both serve the AAA market quite well. GTA 6, Assassin's Creed and CoD are probably good enough indicators that the performance is enough, even if there is always room for more (as PC ports show). The PC market will also probably be fine even if stagnation in perfomance gains has been creeping in for a few years now.
[0]: except Nintendo which relies on NVIDIA although their APU there focuses more on efficiency than top performance.
A Chinese company like CXMT will surely fill that unaddressed market the way CXMT is doing for memory. It would be rather unwise for nvidia to leave the door to the market open. AMD is positioned well to grow right now due to their non-Apple sillicon unified ram hardware coming soon.
AMD and Intel would be HAPPY to replace them, and plenty capable.
Game consoles like PS5 have been AMD for a few generations.
Steamdeck/Steam Machine are AMD.
But really, Nvidia has no reason to leave gaming behind. They can just start dialing back their ambition on the gaming side and providing GPUs that aren't too useful for inference or training. All gaming needs is stability so that devs can aim for something. Games looked great 20 years ago and they'll look great 20 years from now, as long as developers know what they are building for.
It's still a 15B market for Nvidia, it's not nothing. But I'm curious how they're going to turn Rubin into a gaming GPU. I think at this point consumer GPU upgrades are going to be AI-related upgrades that happen to also help raster capabilities. Blackwell was already kind of a dud on performance uplift from Ada beyond the new LLM features.
Question: wouldn’t the fab be the actual bottleneck? In other words, why wouldn’t TSMC make more NVIDIA chips instead of AMD ones? I assume they’ll just do whichever is paying more, so if NVIDIA chips are better, gamers would be willing to pay more for them and in turn TSMC will be willing to make more of them?
You must not be paying attention, they already have.
Intel is going nowhere but we all knew that anyways.
And again, you must not be paying attention, AMD is doing exactly what they said they would. No flagship for RDNA4 (just like RDNA2), RDNA5 flagship (10900 XT) coming right on schedule
I think they'll keep the gaming market alive for a while because renting gaming hardware from the cloud (GeForce NOW) is very congruous with AI keeping consumer hardware prices sky-high.
It continues modern trend of chow companies don't want consumers to truly own anything. Finance a car, pay a monthly subscription fee for heated seats, rent a phone, stream a movie, get rid of physical media, rent a GPU.
But if GeForce NOW doesn't take off, and they get convinced that the AI bubble will not pop, I could see them pulling a Micron and ending their consumer product lines.
> I really don't think it's an if question but a when
Nvidia still will ship gaming products. The upcoming RTX Spark laptop APUs are still gaming-capable - we also have Blackwell gaming GPUs and the Nvidia-powered Nintendo Switch 2.
People echoed this sentiment during the crypto mining crunch, and we still got gaming hardware designs after that blew over. One of CUDA's core value props is the consumer market, and Nvidia probably won't surrender it unless hardware becomes unreasonably scarce.
I don't think crypto is comparable. They barely made some dedicated crypto GPUs that market was always fickle due to ASCIs.
Look at the nvidia revenue breakdown chart, the AI boom looks quite different.
> Also I don't think AMD and Intel is capable "to step in" to replace them
AMD has powered 2 generations each of Sony and Xbox consoles, Steam deck and shops a ton of GPUs especially if you count APUs. And then Intel literally ship more GPUs than Nvidia and AMD combined.
The gaming market doesn't need Nvidia. Especially as AAA is cratering.
They may allocate different number of resources every year based on market conditions but they'll never give up on gaming, that would be extremely silly.
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.
It's always funny to me when they do the fear-propaganda, e.g. A statement like "There's a 10% chance that AI will destroy humanity in a decade". If a government were for the people, it can reasonably react with "Okay - if that's the case, you should shut down. And if not you will be arrested. Because if this is true, you're willingly building equivalent of a nuclear bomb."
Yeah, I've worked in risk management and if a company said "what we're doing has a 10% chance of killing lots of people" it'd get shut down so fast it'd make your head spin
>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.
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.
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.
Quite a lot better than people originally thought. There is a LOT of demand for 5+ year old Ampere on the secondary market, and hyperscalers are still holding on to many of them since they can’t acquire new compute fast enough.
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.
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.
This is what I’m not getting - we’re spending more than the global gross sales of all software on the planet on AI, how much more software needs to be sold and for how much more to recoup?
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.
While I dislike this take, when the dust settles we will have compute clusters orders of magnitude larger than anything that existed in 2023.
If demand vanishes for the 3 million cards Amazon just bought, then something will be done with them. The AI market may end up in a bizarre jepson's paradox of rotation between inference use cases and model training.
I find "bro" and "dudebro" to be such fascinating slurs. The previous incarnation was "neckbeard" / "obese dude living in mom's basement", so "dudebro" comes across almost like a compliment.
As the breakneck growth slows, the multiples will compress, and the companies will pull back on spending accordingly as they watch their stocks decline and investors demand more conservative spending behavior.
The Internet didn't stop expanding in 2000-2001. Everything got drastically larger over the following two decades. The multiples on earnings did implode for ~15 years however. MSFT stock for one example went nowhere during that time and compressed down to a near single digit PE.
AI will be a minimum of 10x larger in most every regard 20 years out. That has nothing to do with shorter-term multiples given to these companies in relation to the hyper fast growth they have been riding early in the boom.
> 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...
“as long as it’s cash flow continues” is doing a lot of optimistic heavy lifting. The whole premise of the circular financing worry is that Nvidia sits in the middle of all the guarantees made to companies like OpenAI. If any of those companies become insolvent, Nvidia is on the hook for it.
Also Nvidia isn’t really creating money. The 500B number is third party capital that already exists (BX, Apollo, etc).
Yea, but they would have to become insolvent in a way that makes compute lose value.
The reason Nvidia is comfortable making these deals is because if OpenAI can’t use the compute, someone else can.
Granted OpenAI going insolvent likely means a drop in the value of compute…
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> “as long as it’s cash flow continues” is doing a lot of optimistic heavy lifting
It's not. It's stating a condition. For traditional banks, a stock crash can independently trigger a failure.
> whole premise of the circular financing worry is that Nvidia sits in the middle of all the guarantees made to companies like OpenAI. If any of those companies become insolvent, Nvidia is on the hook for it
Sorry, I meant revenues. If Nvidia's revenues stay stable, these commitments aren't a problem. Even if the stock price crashes.
> Nvidia isn’t really creating money
It absolutely is. Similar to the way banks create money [1]. The commitments support credit that wouldn't exist without it.
[1] https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...
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M2 is $21 trillion, which is what the fed signed up to backstop. How much did NVDA sign up to backstop?
> which is what the fed signed up to backstop
No, it's not. M2 includes things like traveler's cheques and money-market funds.
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It would also follow that by increasing the money supply significantly they’re also contributing to inflation a great deal correct? (Given the rest of the economy is not growing at near the same rate as the AI industry)
Maybe a dumb question but how is NVIDIA increasing the total supply of money? Only the fed can actually order more money to be "created". Private companies can only work within the existing supply, that is, their reserves, no?
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Regardless of NVIDIA and LLM/AI, the claim that inflation is caused directly, or without-fail, by an increase in money supply - is not well founded. A significant money supply increase may very well have a tiny or possibly even negative price-increasing impact - depending on how money is supplied, to which elements and under what conditions.
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well, M2 money supply is increasing with or without AI industry
Key difference is that these loans, which do increase the money supply and create inflation, are on average productive and profitable and thus deflationary. Quantitative easing is just printing money and often goes towards repaying bad debts, which are unproductive and thus not deflationary, so the inflation (increase in money supply) does not outweigh the deflation (creating of goods)
> The good news: I have seen no evidence Nvidia has borrowed against its stock or otherwise linked its equity value to these commitments.
Nvidia doesn't need it. It funds other companies. They do this thing that Nvidia doesn't do. It shows up on their balance sheets and Nvidia just gets to claim the valuation of the investment on its balance sheet.
It can't go tits up!
Its stock could crash without causing–as long as its cash flows continue–a credit crisis through its investments and commitments
Uh, that’s a pretty load-bearing as long as its cash flows continue. The two things are surely correlated.
> that’s a pretty load-bearing as long as its cash flows continue. The two things are surely correlated
It's an important difference. In the GFC, the value of AAA-rated tranches fell. With the benefit of hindsight, we know they continued paying. They were directly leveraged, however, so mark-to-market losses caused firms to fail.
Nvidia stock crashing shouldn't have a similar effect to these commitments. If someone else has massively levered their Nvidia position, they'll obviously blow up. But Nvidia could survive a good deal of equity-market tumult in a way a bank could not.
Related but in specific ways. Stock is often priced in anticipation of growth. If NVDA could meet its credit obligations while its real profit stayed flat, the two would diverge, at least for awhile. A large amount of NVDA’s current cash flow is likely purchase contracts with a fixed multi-year term, which further smooths out the impact of, say, a stock crash following a couple of quarters of terrible earnings.
Now, whether many things NVDA has invested in with expectation of repayment or earnings would be able to repay or appreciate in a market environment where Nvidia’s stock was crashing? That’s another question entirely.
Indeed. https://www.groundbrkr.com/p/the-second-derivative-why-no-on...
> load-bearing
I'm worried I'm going to start picking up claudisms, and then accused of being AI.
"Uh, that’s a pretty load-bearing as long as its cash flows continue. The two things are surely correlated."
Ppl have made the prediction of it being a bubble or unsustainable since 2022. At this point, it's hard to say these people have credibility anymore. Ai is big enough, much like Google in 2005 or Facebook/Social Network in 2010 or apps in 2015, that it's an institution unto itself. It's not going to just crash as so many are expecting and have been wrong the past 4 years about.
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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.
Well the key difference making any superficial similarities fall apart is Nvidia does not have neutral economy-wide goals of maintaining small+stable inflation, near-full employment and stabilizing financial institutions like the Fed does. Nvidia is entirely self interested in protecting their own shareholder value (that includes the incestuous web of investments ultimately ending up spent on their GPUs).
The structure of the Fed is setup the way it is to limit the sort of self-serving, myopic political micromanaging that could be damaging to the economy at large. And, unlike a beneficiary of rapid growth like Nvidia, has (historically) tried to identify potential indicators warning of unsustainable bubbles that could lead to financial contagion and tries to mitigate that risk using the limited monetary tools available and their public soapbox.
A similar decision making structure would potentially be very undesirable to Nvidia shareholders as caution over long time horizons would likely produce what they would consider an excessively conservative, defensive strategy to avoid putting too much air into the bubble too quickly (at the expense of their valuation).
Corporations certainly don't have the same goals government does, but human nature applies universally.
I'm not saying that corporations should have exactly the same rules and structure as government does, but perhaps many of the ideas used to design governments can be borrowed.
USA is trying to become corporatocracy
In a country without religion, banner or ideology to unite the people in current-and-coming turbulent times, the bet is made on "unite under money, or have no money left"
the way to fight it is to be principled even in front of cheaper options - and to support others like you
To be clear: I'm not trying to advocate for more corporate power.
The governments of today weren't formed out of "discussions of power"
The American Revolution was very much a discussion about power. Of course, it wasn't just a discussion (we had to fight a war to defend the new form of government), but it was driven by the same concerns about the distribution of power.
Yeah its soooo interesting! Totally not dystopian, just soooo interesting and fascinating to ponder these scenarios in which corporations hold equal power to national governments!
Just such a curious scenario to let your mind wander about, how society would look like in these scenarios!
/s
I'm honestly so sick of the suspense of disbelief on this site, how is this more "interesting" to you, than the absolute sheer terror you should feel about going back to feudalism and serfdom? A typical western national state ensures that you have basic rights as a human being and aren't exploited to the death by non-government entities.
You're catastrophizing and misreading the original comment in an uncharitable way.
I'm not advocating for corporations to have equal power with governments, though. I think that's generally a terrible idea.
Looking at any organization with power and people involved, perhaps we can use the same ideas that traditionally apply to government in more places. That's all I'm saying.
This is not some mindless intellectual exercise to distract from how things are. In fact, as a proposal for how to reform corporate power, it's the opposite.
(Also, even though I think corporate power should be limited to a very specific arm of society, and that we shouldn't encourage more corporate power, you are greatly exaggerating. Feudalism and the abolition of human rights are not right around the corner.)
Lighten up
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.
AMD would step in, they where behind nvidia but they've been closing that gap for a while and the 9070XT is the current value king (in this fucked up market) for mid-high gaming and you can actually buy them.
Demand for Nvidia cards has outstripped supply even on the mid-high cards specifically because they do better with local models than AMD cards with the same VRAM do broadly.
AI has completely broken the PC gaming market (and PC/Laptop market more broadly but gaming is really hit hard because it's the exact components that matter for both that overlap).
Nvidia had the mind share among gamers but so did Intel once, inertia only lasts so long they've been thoroughly intent on burning that to the ground for a while, back to the post 1080's
If RDNA5 is good (and 4 was it closed the gap on RT) they'll been in a solid place to take the spot if Nvidia do cede the ground.
I have a 7900XTX the last flagship card AMD did (about equal to a 9070XT for raster but 24GB VRAM not 16GB) and it has been and is a stellar card for gaming (let down only if you care about RT and the games I play don't have it).
Flawless under Linux, weaker on the AI behind nvidia but it runs Qwen surprisingly well and I didn't and don't care too much about that except to poke it occasionally.
Cryptocurrency mining had it broken before that. PC gaming's golden years are behind us, as AI, even if not LLMs, seems like it's not going away, so the gaming market is now the niche hobby while AI takes center stage.
RIP. My first gaming ~GPU~ (we called them 3d accelerators back then) was a Diamond Monster II with a 3dfx Voodoo 2 chip.
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> Also I don't think AMD and Intel is capable "to step in" to replace them.
It's kind of weird. nVidia kind of has the PC market cornered, but AMD has had the last couple of generations of Xbox and Playstation. Also, they power the Steam Deck/Machine, and Valve has been contributing a lot of AMD graphics features into the Linux drivers. There is a world where AMD (and maybe even Linux on AMD specifically) becomes the de facto standard for gaming.
Well AMD does have the Steam Machine now, they really like doing console integrations. Shame it won't really sell given the pricing situation.
> It's kind of weird. nVidia kind of has the PC market cornered, but AMD has had the last couple of generations of Xbox and Playstation
I have been getting the vibes that Sony is positioning themselves to back out of videogames. I don't think we're going to see a PS6.
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Maybe this is silly of me, but maybe gaming would enjoy an era of hardware upgrades being rather unviable so the focus turns to optimization and aesthetic.
The thing is really that even entry level gaming is getting expensive. I was considering building a pc and everything is expensive, I was going to replace the disk of my ps4 thag I bought used for 100$ and the 1tb ssd costs 150$
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It will be interesting times but I don't think anyone will enjoy a plateau because it's expensive. Even replacing existing hardware is expensive now. Hardly enjoyabe.
A retraction from the gaming market wouldn't necessarily mean they'd still even produce the current crop of products. I could (and I would argue would) involve a complete shuttering of the GeForce brand, halting current production. On the assumption that Intel and AMD would follow, that wouldn't be an end of upgrades, but an end to the market.
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It’s not silly. games use far more hardware than they really need. It also pushes out release dates of aggressive console schedules like ps6 because even if it’s a massive upgrade and you have IP locked into your console, no one is going to pay $4000 to play a game like wolverine.
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They're advertising DLSS5 just now though.
> I really don't think it's an if question but a when because it almost feels like an afterthought
I feel your reasoning is very weird. Are they losing money by selling consumer GPU? Just because the profit isn't that much compared to AI it doesn't mean that it's negative, and for-profit companies are not known for leaving money on the table. Apple doesn't reveal how much Apple TV+ makes for them either but I don't see it be gone anytime soon.
NVidia is limited by the number of chips they can produce.
If you can fab 1000 chips, and can sell some for $500 and some for $80000 what are you going to do?
The game GPU is at once profitable, but causes them to give up far more profits than they're gaining from it.
They're maintaining the game market to have multiple markets and not go all in, but it's strategic hedging at this point. When NVidia makes a gaming GPU instead of a data center GPU they are leaving money on the table in the short term since they're constrained at the fab level.
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An alternative example would be Apple & the Mini 12 & 13. They made money on those, too, but here we are.
Which is distinctly different both in purpose and technology than the previous versions. DLSS 5 is no longer about frame improvements. It’s about increasing graphical fidelity with active AI rendering.
DLSS 5 is trying to relight and retexture the scene using AI. DLSS 4 is just trying to take a lower quality image and upscale it using AI
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Nvidia is limited by the number of engineers they have. It might turn out that the AI market is so lucrative that it’s best to reallocate their gaming-focused engineers to AI.
Apple TV is at least a growth market for them, whereas gaming is sort of capped and clearly a tiny piece of nvidia’s revenue atm.
AAA gaming is cooked, and AMD/Intel is plenty able to support indie to AA needs.
That seems a bit overzealous, most consoles[0] run on AMD chips today.
Both PS 5 and Xbox are based on AMD APUs and both serve the AAA market quite well. GTA 6, Assassin's Creed and CoD are probably good enough indicators that the performance is enough, even if there is always room for more (as PC ports show). The PC market will also probably be fine even if stagnation in perfomance gains has been creeping in for a few years now.
[0]: except Nintendo which relies on NVIDIA although their APU there focuses more on efficiency than top performance.
Kushner and MBS bought Electronic Arts for $55 billion, so at least there will be a bailout or instructions to Nvidia to continue gaming cards.
How so? I have a 5070ti but from what I've read the 9070xt keeps up well enough. As long as you don't need the cuda or dlss AMD is a good option
A Chinese company like CXMT will surely fill that unaddressed market the way CXMT is doing for memory. It would be rather unwise for nvidia to leave the door to the market open. AMD is positioned well to grow right now due to their non-Apple sillicon unified ram hardware coming soon.
AMD and Intel would be HAPPY to replace them, and plenty capable.
Game consoles like PS5 have been AMD for a few generations. Steamdeck/Steam Machine are AMD.
But really, Nvidia has no reason to leave gaming behind. They can just start dialing back their ambition on the gaming side and providing GPUs that aren't too useful for inference or training. All gaming needs is stability so that devs can aim for something. Games looked great 20 years ago and they'll look great 20 years from now, as long as developers know what they are building for.
I kind of feel like this topples the house of cards a bit. What else is all the visual genAI tech for besides consumer entertainment?
Fraud?
It's still a 15B market for Nvidia, it's not nothing. But I'm curious how they're going to turn Rubin into a gaming GPU. I think at this point consumer GPU upgrades are going to be AI-related upgrades that happen to also help raster capabilities. Blackwell was already kind of a dud on performance uplift from Ada beyond the new LLM features.
That 15B also includes people buying 5090s for local LLMs.
And it’s maybe 5-10% of their revenue at lower profit margins.
Consumer cards just don’t matter very much to nVidia anymore.
In 2020 it was half of their revenue.
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Question: wouldn’t the fab be the actual bottleneck? In other words, why wouldn’t TSMC make more NVIDIA chips instead of AMD ones? I assume they’ll just do whichever is paying more, so if NVIDIA chips are better, gamers would be willing to pay more for them and in turn TSMC will be willing to make more of them?
> I wonder when they will give up on the gaming market because that could take down several publishers and developers.
It really shouldn't: the most money in games are those games that don't require high end GPUs.
You must not be paying attention, they already have.
Intel is going nowhere but we all knew that anyways.
And again, you must not be paying attention, AMD is doing exactly what they said they would. No flagship for RDNA4 (just like RDNA2), RDNA5 flagship (10900 XT) coming right on schedule
I think they'll keep the gaming market alive for a while because renting gaming hardware from the cloud (GeForce NOW) is very congruous with AI keeping consumer hardware prices sky-high.
It continues modern trend of chow companies don't want consumers to truly own anything. Finance a car, pay a monthly subscription fee for heated seats, rent a phone, stream a movie, get rid of physical media, rent a GPU.
But if GeForce NOW doesn't take off, and they get convinced that the AI bubble will not pop, I could see them pulling a Micron and ending their consumer product lines.
Eh, AMD makes a lot of video game console SoCs. If you look at the steam hardware survey most people are running ancient computers.
> I really don't think it's an if question but a when
Nvidia still will ship gaming products. The upcoming RTX Spark laptop APUs are still gaming-capable - we also have Blackwell gaming GPUs and the Nvidia-powered Nintendo Switch 2.
People echoed this sentiment during the crypto mining crunch, and we still got gaming hardware designs after that blew over. One of CUDA's core value props is the consumer market, and Nvidia probably won't surrender it unless hardware becomes unreasonably scarce.
I don't think crypto is comparable. They barely made some dedicated crypto GPUs that market was always fickle due to ASCIs. Look at the nvidia revenue breakdown chart, the AI boom looks quite different.
https://ourworldindata.org/data-insights/nvidias-revenue-fro...
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> Also I don't think AMD and Intel is capable "to step in" to replace them
AMD has powered 2 generations each of Sony and Xbox consoles, Steam deck and shops a ton of GPUs especially if you count APUs. And then Intel literally ship more GPUs than Nvidia and AMD combined.
The gaming market doesn't need Nvidia. Especially as AAA is cratering.
They may allocate different number of resources every year based on market conditions but they'll never give up on gaming, that would be extremely silly.
Archive: http://archive.today/kt50V
Thank you
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.
> So let's say this big boogey man technology will end all life on earth and we all slow down together.
The first messenger from Anthropic is out with this exact message. Stop us (them) or everyone will be killed by 2030
https://youtu.be/i30jVPqQeOM?si=yosxw4MLoVtPW-7v
It's always funny to me when they do the fear-propaganda, e.g. A statement like "There's a 10% chance that AI will destroy humanity in a decade". If a government were for the people, it can reasonably react with "Okay - if that's the case, you should shut down. And if not you will be arrested. Because if this is true, you're willingly building equivalent of a nuclear bomb."
Yeah, I've worked in risk management and if a company said "what we're doing has a 10% chance of killing lots of people" it'd get shut down so fast it'd make your head spin
The frontier companies asking for regulation is somehow one of their less insane marketing ploy to date
>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.
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.
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.
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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.
It’s Different This Time(tm)
Market correction will happen. Banks go down and close during recessions. Hope these people are wise enough to see through these effects.
Should there be a LIBOR for 1GB VRAM set each morning?
https://www.dramexchange.com/
Considering that LIBOR was discontinued in 2023 after a scandal of manipulation and fraud, YES! It's back to the future.
CME is launching futures contracts for GPU compute: https://www.cmegroup.com/markets/energy/power/compute-future...
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.
Quite a lot better than people originally thought. There is a LOT of demand for 5+ year old Ampere on the secondary market, and hyperscalers are still holding on to many of them since they can’t acquire new compute fast enough.
https://www.cnbc.com/video/2026/08/24/making-old-gpus-new-ag...
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.
I view the market as celestial objects influencing each other through a lattice similar to spacetime
Everything influences each other with varying gravitational pull
At one point the mental model was more like a web, but spacetime with mass matches the model more closely
Money is a lot like mass, it has it's own gravity.
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Interesting juxtaposition with Dario's/Anthropic's 'we must pace the frontier' missive today
If you read between the lines, it was mostly about China.
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?
> And what is TSMC in this analogy?
The mint?
A platform: aka the foundation under the bank.
The material cement that allows chips to exist above it.
And the platform is made of time: ours.
If TSMC is a platform, then why doesn't it have an App Store?
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ASML is the foundation. Without them, none of this would exist.
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Idk… government bonds or something?
What’s upstream of the central bank? …Congress?
The currency press operator and manufacturer.
do they lend money to their customers to buy their own chips?
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.
Nvidia will quake the stock market.
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.
This is what I’m not getting - we’re spending more than the global gross sales of all software on the planet on AI, how much more software needs to be sold and for how much more to recoup?
The economics only make sense if they can replace a huge number of workers with AI.
But that reminds me of the story of the union rep telling Ford: “good luck getting your machines to buy your cars”
(Fyi Ford took note and started paying his workers enough that they’d buy his cars)
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.
> They don't take interest (usury)
Nvidia booked $496 million in interest income in Q2 alone [1].
[1] https://www.sec.gov/Archives/edgar/data/1045810/000104581026... page 15
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While I dislike this take, when the dust settles we will have compute clusters orders of magnitude larger than anything that existed in 2023.
If demand vanishes for the 3 million cards Amazon just bought, then something will be done with them. The AI market may end up in a bizarre jepson's paradox of rotation between inference use cases and model training.
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I find "bro" and "dudebro" to be such fascinating slurs. The previous incarnation was "neckbeard" / "obese dude living in mom's basement", so "dudebro" comes across almost like a compliment.
Lol the page doesn't even scroll
Paywall?
yep, but click on the archiv.ph link. There you can read the article for free.
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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...
As the saying goes. The market can stay irrational longer than you can stay solvent.
This phrase has reached the point of semantic satiation in my mind.
Maybe THAT'S the real recession indicator.
What indication do you see that we will see a slow down in model capabilities or AI use?
As the breakneck growth slows, the multiples will compress, and the companies will pull back on spending accordingly as they watch their stocks decline and investors demand more conservative spending behavior.
The Internet didn't stop expanding in 2000-2001. Everything got drastically larger over the following two decades. The multiples on earnings did implode for ~15 years however. MSFT stock for one example went nowhere during that time and compressed down to a near single digit PE.
AI will be a minimum of 10x larger in most every regard 20 years out. That has nothing to do with shorter-term multiples given to these companies in relation to the hyper fast growth they have been riding early in the boom.
Where did you exit to?
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just cashout at the peak, hedge fund manager probably
hardware? yes Nvidia is software? Google is. AI = Data Data = Google
This reads like a SoftBank slide deck.
Reading this makes me yearn for the ability to downvote comments