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In accounting terms, this is a shady business practice known as "round tripping" where you invest in a company for the sole purpose of them buying your product.

In accounting terms, this is a shady business practice known as "round tripping" where you invest in a company for the sole purpose of them buying your product. It allows you to count your revenue multiple times.

klysm 1y ago
Is it counting revenue multiple times? It's buying your own products really, but not sure how that counts as double counting revenue
- fufxufxutc 1y ago
  The "investment" came from their revenue, and will be immediately counted in their revenue again.
  - weego 1y ago
    In this case it seems that if we're being strict here the investment could then also show up as fixed assets on the same balance sheet
- lumost 1y ago
  It's real revenue, but you are operating a fractional reserve revenue operation. If the person your investing in has trouble, or you have trouble - the whole thing falls over very fast.
- rsstack 1y ago
  Customer A pays you $100 for goods that cost you $10. You invest $100-$10=$90 in customer B so that they'll pay you $90 for goods that cost you $9. Your reported revenue is now $100+$90=$190, but the only money that entered the system is the original $100.
  - FinnKuhn 1y ago
    And your evaluation also rises as a consequence of your increased revenue.
  - Aurornis 1y ago
    Yes, but you’ve also incurred a $90 expense in purchasing the stock of Company B and that stock is on the balance sheet. In the actual shady version of this, Company B isn’t the hottest AI investment around, it’s a shell company created by your brother’s cousin that isn’t actually worth what you’re claiming on the balance sheet because it was only created for the round tripping shell game.
    - deleted 1y ago
      [deleted]
    - mxschumacher 1y ago
      that's what Carvana is doing with the car loans it securitizes : https://hindenburgresearch.com/carvana/ https://hindenburgresearch.com/carvana/
  - _2d30 1y ago
    Except that this is isn't round-tripping at all. Round-tripping doesn't result in a company actually incurring expenses to create more product. Round-tripping is the term for schemes that enable you to double count assets/revenue without any economic effects taking place. Every time HackerNews talks about anything in the legal or finance realm, people trip over themselves to make arguments for why something a big tech is doing is illegal. This is definitively neither illegal nor shady. If Nvidia believes, for example, that OpenAI can use their GPUs to turn a profit, then this is inherently positive sum economically for both sides: OpenAI gets capital in the form of GPUs, uses them to generate tokens which they sell above the cost of that capital and then the return some of the excess value to Nvidia. This is done via equity. It's a way for Nvidia to get access to some of the excess value of their product.
    - bob1029 1y ago
      At some point one might simply argue that the nature and timing of these wildly fantastical press releases is tantamount to a "scheme to defraud".
      - _2d30 1y ago
        “ Every time HackerNews talks about anything in the legal or finance realm, people trip over themselves to make arguments for why something a big tech is doing is illegal.”
- deleted 1y ago
  [deleted]
selectodude 1y ago
This is some Enron shit. Lets see NVDA mark to market these profits. Keep the spice flowing.
FinnKuhn 1y ago
They for example did a similar deal with Nscale just last week. https://www.cnbc.com/2025/09/17/ai-startup-nscale-from-uk-is-blowing-away-nvidia-ceo-jensen-huang.html https://www.cnbc.com/2025/09/17/ai-startup-nscale-from-uk-is...
Aurornis 1y ago
This is being done out in the open (we’re reading the press announcement) and will be factored into valuations. Also, investing in OpenAI means they get equity in return, which is not a worthless asset. There is actual mutually beneficial trade occurring.
- mxschumacher 1y ago
  what is OpenAI's durable, competitive advantage that differentiates it against the numerous other LLM providers? Investing at a $500bn valuation for a company that's losing money and has bad unit economics this seems rather aggressive.
landl0rd 1y ago
Nvidia has consistently done this with Coreweave, Nscale, really most of its balance sheet investments are like this. On the one hand there's a vaguely cogent rationale that they're a strategic investor and it sort of makes sense as an hardware-for-equity swap; on the other, it's obviously goosing revenue numbers. This is a bigger issue when it's $100B than with previous investments. It's a good time to gently remind everyone that there are a whole pile of legal things one can do to change how a security looks "by the numbers" and this isn't even close to the shadiest. Heck some sell-side research makes what companies themselves do look benign.
- yannyu 1y ago
  A relevant joke, paraphrased from the internet: Two economists are walking in a forest when they come across a pile of shit. The first economist says to the other “I’ll pay you $100 to eat that pile of shit.” The second economist takes the $100 and eats the pile of shit. They continue walking until they come across a second pile of shit. The second economist turns to the first and says “I’ll pay you $100 to eat that pile of shit.” The first economist takes the $100 and eats a pile of shit. Walking a little more, the first economist looks at the second and says, "You know, I gave you $100 to eat shit, then you gave me back the same $100 to eat shit. I can't help but feel like we both just ate shit for nothing." "That's not true", responded the second economist. "We increased total revenue by $200!"
  - paxys 1y ago
    The punchline is supposed to be GDP, but yeah, same concept.
- hoosieree 1y ago
  This should go without saying but unfortunately it really doesn't these days: This kind of corporate behavior is bad and will end up hurting somebody. If we're lucky the fallout will only hurt Nvidia. More likely it will end up hurting most taxpayers.
Mistletoe 1y ago
Isn’t our stock market basically propped up on this AI credits etc. house of cards right now?
rzerowan 1y ago
Its the same loop de loop NVIDIA is doing with Coreweave as i understand.'Investing' in coreweave which then 'buys' NVIDIA merch for cloud rental , resulting in Coreweave being the top 4 customers of NVIDIA chips.
- vessenes 1y ago
  Wait, why the quotes? NVDA sends cash, and the Coreweave spends it, no? I don’t think quotes are accurate, if they imply these transactions aren’t real, and material. At the end of the day, NVDA owns Coreweave stock, and actual, you know, physical hardware is put into data centers, and cash is wired.
  - rzerowan 1y ago
    Well we do have the precedent of HPE/Autonomy in the UK [1], which ruled that the process is essentially fraud. Whether there will be a prosecution in the current corporate environment remains to be seen. Essentially though the roundtrip revenue inflation was already ruled illegal. [1]https://www.corpdev.org/2025/07/23/hp-awarded-945-million-in-landmark-autonomy-fraud-ruling-implications-for-tech-ma-due-diligence/ https://www.corpdev.org/2025/07/23/hp-awarded-945-million-in...
rsync 1y ago
"In accounting terms, this is a shady business practice known as "round tripping" where you invest in a company for the sole purpose of them buying your product. It allows you to count your revenue multiple times." ... and we've seen this before in previous bubbles ...
mandeepj 1y ago
> this is a shady business practice known as "round tripping" where you invest in a company for the sole purpose of them buying your product. Microsoft and Google have been doing it for decades. Probably, MS started that practice.
GuB-42 1y ago
I don't really understand how it is round tripping. In the end, Nvidia will have OpenAI shares, which are valuable, and OpenAI will have GPUs, which are also valuable. It is not fake revenue, the GPUs will be made, sold at market price, and used, they are not intended to be bought back and sold to another customer. And hopefully, these GPUs will be put to good use by OpenAI so that they can make a profit, which will give Nvidia some return on investment. It doesn't look so different from a car loan, where the dealer lends you the money so that you can buy their car.
- treis 1y ago
  If OpenAI doesn't pan out than Nvidia has worthless OpenAI stock and OpenAI has a pile of mostly useless GPUs.
  - dwaltrip 1y ago
    That’s still not round tripping?
- udkl 1y ago
  It looks like NVDIA looking to move up the value chain to have a stake in the even higher margin/addressable market instead of simply selling the tools.
- nmfisher 1y ago
  A dollar is always a dollar, so it's hard to claim that $1 million in revenue is actually worth $10 million. OpenAI shares, on the other hand, aren't publicly traded, so it's much easier to claim they're worth $10 million when noone would actually be willing to buy for more than $1 million. It's not necessarily manipulative but it's also not exactly an arms-length purchase of GPUs on the open market.
t0mas88 1y ago
Oracle also announced a lot of future revenue from AI, while they're part of Stargate Partners that is investing in OpenAI. Similar deal...

klysm 1y ago

Is it counting revenue multiple times? It's buying your own products really, but not sure how that counts as double counting revenue

fufxufxutc 1y ago
The "investment" came from their revenue, and will be immediately counted in their revenue again.
- weego 1y ago
  In this case it seems that if we're being strict here the investment could then also show up as fixed assets on the same balance sheet
lumost 1y ago
It's real revenue, but you are operating a fractional reserve revenue operation. If the person your investing in has trouble, or you have trouble - the whole thing falls over very fast.
rsstack 1y ago
Customer A pays you $100 for goods that cost you $10. You invest $100-$10=$90 in customer B so that they'll pay you $90 for goods that cost you $9. Your reported revenue is now $100+$90=$190, but the only money that entered the system is the original $100.
- FinnKuhn 1y ago
  And your evaluation also rises as a consequence of your increased revenue.
- Aurornis 1y ago
  Yes, but you’ve also incurred a $90 expense in purchasing the stock of Company B and that stock is on the balance sheet. In the actual shady version of this, Company B isn’t the hottest AI investment around, it’s a shell company created by your brother’s cousin that isn’t actually worth what you’re claiming on the balance sheet because it was only created for the round tripping shell game.
  - deleted 1y ago
    [deleted]
  - mxschumacher 1y ago
    that's what Carvana is doing with the car loans it securitizes : https://hindenburgresearch.com/carvana/ https://hindenburgresearch.com/carvana/
- _2d30 1y ago
  Except that this is isn't round-tripping at all. Round-tripping doesn't result in a company actually incurring expenses to create more product. Round-tripping is the term for schemes that enable you to double count assets/revenue without any economic effects taking place. Every time HackerNews talks about anything in the legal or finance realm, people trip over themselves to make arguments for why something a big tech is doing is illegal. This is definitively neither illegal nor shady. If Nvidia believes, for example, that OpenAI can use their GPUs to turn a profit, then this is inherently positive sum economically for both sides: OpenAI gets capital in the form of GPUs, uses them to generate tokens which they sell above the cost of that capital and then the return some of the excess value to Nvidia. This is done via equity. It's a way for Nvidia to get access to some of the excess value of their product.
  - bob1029 1y ago
    At some point one might simply argue that the nature and timing of these wildly fantastical press releases is tantamount to a "scheme to defraud".
    - _2d30 1y ago
      “ Every time HackerNews talks about anything in the legal or finance realm, people trip over themselves to make arguments for why something a big tech is doing is illegal.”
deleted 1y ago
[deleted]

selectodude 1y ago

This is some Enron shit. Lets see NVDA mark to market these profits. Keep the spice flowing.

FinnKuhn 1y ago

They for example did a similar deal with Nscale just last week. https://www.cnbc.com/2025/09/17/ai-startup-nscale-from-uk-is-blowing-away-nvidia-ceo-jensen-huang.html https://www.cnbc.com/2025/09/17/ai-startup-nscale-from-uk-is...

Aurornis 1y ago

This is being done out in the open (we’re reading the press announcement) and will be factored into valuations. Also, investing in OpenAI means they get equity in return, which is not a worthless asset. There is actual mutually beneficial trade occurring.

mxschumacher 1y ago
what is OpenAI's durable, competitive advantage that differentiates it against the numerous other LLM providers? Investing at a $500bn valuation for a company that's losing money and has bad unit economics this seems rather aggressive.

landl0rd 1y ago

Nvidia has consistently done this with Coreweave, Nscale, really most of its balance sheet investments are like this. On the one hand there's a vaguely cogent rationale that they're a strategic investor and it sort of makes sense as an hardware-for-equity swap; on the other, it's obviously goosing revenue numbers. This is a bigger issue when it's $100B than with previous investments. It's a good time to gently remind everyone that there are a whole pile of legal things one can do to change how a security looks "by the numbers" and this isn't even close to the shadiest. Heck some sell-side research makes what companies themselves do look benign.

yannyu 1y ago
A relevant joke, paraphrased from the internet: Two economists are walking in a forest when they come across a pile of shit. The first economist says to the other “I’ll pay you $100 to eat that pile of shit.” The second economist takes the $100 and eats the pile of shit. They continue walking until they come across a second pile of shit. The second economist turns to the first and says “I’ll pay you $100 to eat that pile of shit.” The first economist takes the $100 and eats a pile of shit. Walking a little more, the first economist looks at the second and says, "You know, I gave you $100 to eat shit, then you gave me back the same $100 to eat shit. I can't help but feel like we both just ate shit for nothing." "That's not true", responded the second economist. "We increased total revenue by $200!"
- paxys 1y ago
  The punchline is supposed to be GDP, but yeah, same concept.
hoosieree 1y ago
This should go without saying but unfortunately it really doesn't these days: This kind of corporate behavior is bad and will end up hurting somebody. If we're lucky the fallout will only hurt Nvidia. More likely it will end up hurting most taxpayers.

Mistletoe 1y ago

Isn’t our stock market basically propped up on this AI credits etc. house of cards right now?

rzerowan 1y ago

Its the same loop de loop NVIDIA is doing with Coreweave as i understand.'Investing' in coreweave which then 'buys' NVIDIA merch for cloud rental , resulting in Coreweave being the top 4 customers of NVIDIA chips.

vessenes 1y ago
Wait, why the quotes? NVDA sends cash, and the Coreweave spends it, no? I don’t think quotes are accurate, if they imply these transactions aren’t real, and material. At the end of the day, NVDA owns Coreweave stock, and actual, you know, physical hardware is put into data centers, and cash is wired.
- rzerowan 1y ago
  Well we do have the precedent of HPE/Autonomy in the UK [1], which ruled that the process is essentially fraud. Whether there will be a prosecution in the current corporate environment remains to be seen. Essentially though the roundtrip revenue inflation was already ruled illegal. [1]https://www.corpdev.org/2025/07/23/hp-awarded-945-million-in-landmark-autonomy-fraud-ruling-implications-for-tech-ma-due-diligence/ https://www.corpdev.org/2025/07/23/hp-awarded-945-million-in...

rsync 1y ago

"In accounting terms, this is a shady business practice known as "round tripping" where you invest in a company for the sole purpose of them buying your product. It allows you to count your revenue multiple times." ... and we've seen this before in previous bubbles ...

mandeepj 1y ago

> this is a shady business practice known as "round tripping" where you invest in a company for the sole purpose of them buying your product. Microsoft and Google have been doing it for decades. Probably, MS started that practice.

GuB-42 1y ago

I don't really understand how it is round tripping. In the end, Nvidia will have OpenAI shares, which are valuable, and OpenAI will have GPUs, which are also valuable. It is not fake revenue, the GPUs will be made, sold at market price, and used, they are not intended to be bought back and sold to another customer. And hopefully, these GPUs will be put to good use by OpenAI so that they can make a profit, which will give Nvidia some return on investment. It doesn't look so different from a car loan, where the dealer lends you the money so that you can buy their car.

treis 1y ago
If OpenAI doesn't pan out than Nvidia has worthless OpenAI stock and OpenAI has a pile of mostly useless GPUs.
- dwaltrip 1y ago
  That’s still not round tripping?
udkl 1y ago
It looks like NVDIA looking to move up the value chain to have a stake in the even higher margin/addressable market instead of simply selling the tools.
nmfisher 1y ago
A dollar is always a dollar, so it's hard to claim that $1 million in revenue is actually worth $10 million. OpenAI shares, on the other hand, aren't publicly traded, so it's much easier to claim they're worth $10 million when noone would actually be willing to buy for more than $1 million. It's not necessarily manipulative but it's also not exactly an arms-length purchase of GPUs on the open market.

t0mas88 1y ago

Oracle also announced a lot of future revenue from AI, while they're part of Stargate Partners that is investing in OpenAI. Similar deal...