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I wonder how NVIDIA gets to report their investment here from an accounting perspective? Could they book the money TogetherAI spends on GPUs as revenue now, an

I wonder how NVIDIA gets to report their investment here from an accounting perspective? Could they book the money TogetherAI spends on GPUs as revenue now, and then when TogetherAI flops and returns five cents on the investment dollar write it off in a different line of business?

HPMOR 3y ago
NVIDIA probably recognizes revenue upon delivery of product. The investment write down would probably impact their P&L and have some associated tax benefits there.
JonChesterfield 3y ago
Nvidia spending money on nvidia hardware is less annoying than the model of raising money from VCs to give to nvidia. It's an interesting question though - does it still count as a high risk investment worthy of tax advantages if lots of the investment is spent on the hardware the invester sells?
cma 3y ago
Likewise Microsoft's $10 billion OpenAI investment has a large (majority?) portion in Azure cloud credits. Microsoft has around a 70% margin at Azure.
- sebzim4500 3y ago
  > Microsoft has around a 70% margin at Azure. I find this impossible to believe, given they are far from a monopoly here. Where are you getting the figure?
  - vlovich123 3y ago
    I don’t find it surprising that SaaS list price margins could be that high. The big purchasers do volume discounts to get massive discounts while the smaller players are forced to pay more.
    - sebzim4500 3y ago
      If MSFT and AMZN are making a 70% margin then why wouldn't google accept a 30% margin and eat their lunch?
      - vlovich123 3y ago
        No because the overhead and uncertainty involved with smaller customers means they cost more and are less loyal / locked in and thus represent more risk. The smaller customers represent very little revenue in the short term and if one grows to any real size negotiations with sales begins.
  - cma 3y ago
    72% gross margin on Azure: https://www.microsoft.com/en-us/investor/earnings/fy-2023-q2/performance https://www.microsoft.com/en-us/investor/earnings/fy-2023-q2... None of the cloud providers are monopolies, but there are few enough they can collude through tit for tat, though at times I think some were run for growth at a loss. I believe all have multi thousand percent margins on egress bandwidth.
marc__1 3y ago
There are well-defined accounting rules for that, which also applies for joint-ventures, holdings and any holding structure. Many examples, but this was the first relevant link on DDG: https://www2.deloitte.com/us/en/pages/audit/articles/a-roadmap-to-accounting-for-noncontrolling-interests.html https://www2.deloitte.com/us/en/pages/audit/articles/a-roadm...

HPMOR 3y ago

NVIDIA probably recognizes revenue upon delivery of product. The investment write down would probably impact their P&L and have some associated tax benefits there.

JonChesterfield 3y ago

Nvidia spending money on nvidia hardware is less annoying than the model of raising money from VCs to give to nvidia. It's an interesting question though - does it still count as a high risk investment worthy of tax advantages if lots of the investment is spent on the hardware the invester sells?

cma 3y ago

Likewise Microsoft's $10 billion OpenAI investment has a large (majority?) portion in Azure cloud credits. Microsoft has around a 70% margin at Azure.

sebzim4500 3y ago
> Microsoft has around a 70% margin at Azure. I find this impossible to believe, given they are far from a monopoly here. Where are you getting the figure?
- vlovich123 3y ago
  I don’t find it surprising that SaaS list price margins could be that high. The big purchasers do volume discounts to get massive discounts while the smaller players are forced to pay more.
  - sebzim4500 3y ago
    If MSFT and AMZN are making a 70% margin then why wouldn't google accept a 30% margin and eat their lunch?
    - vlovich123 3y ago
      No because the overhead and uncertainty involved with smaller customers means they cost more and are less loyal / locked in and thus represent more risk. The smaller customers represent very little revenue in the short term and if one grows to any real size negotiations with sales begins.
- cma 3y ago
  72% gross margin on Azure: https://www.microsoft.com/en-us/investor/earnings/fy-2023-q2/performance https://www.microsoft.com/en-us/investor/earnings/fy-2023-q2... None of the cloud providers are monopolies, but there are few enough they can collude through tit for tat, though at times I think some were run for growth at a loss. I believe all have multi thousand percent margins on egress bandwidth.

marc__1 3y ago

There are well-defined accounting rules for that, which also applies for joint-ventures, holdings and any holding structure. Many examples, but this was the first relevant link on DDG: https://www2.deloitte.com/us/en/pages/audit/articles/a-roadmap-to-accounting-for-noncontrolling-interests.html https://www2.deloitte.com/us/en/pages/audit/articles/a-roadm...