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As long as both companies remain stable and viable, there's probably limited upside to pouring more money into them. If they fail, and bring down the AI ecosyst
by whynotminot 7mo ago
As long as both companies remain stable and viable, there's probably limited upside to pouring more money into them. If they fail, and bring down the AI ecosystem with them, that is very bad news for Nvidia. So they've been there nurturing their success and providing capital to backstop their exponential growth.
You can see Nvidia stepping in throughout the ecosystem with confidence boosting investments where needed. They haven't just supported Anthropic and OpenAI.
If OpenAI and Anthropic succeed, and get their business fly-wheels fully spinning, they don't necessarily need more capital from Huang. Ultimately the goal of Nvidia is to profit from their long-term success by selling them GPUs for a long, long time. The goal isn't to keep plowing money into them forever.
- adventured 7mo agoThese days Nvidia has more money than it knows what to do with. They could certainly push $5b+ into each company annually and never miss it. They're tracking toward an astounding $200b in operating income (maybe over the next four quarters if the music doesn't suddenly stop).
- locusofself 7mo ago5 billion doesn't look like much when OpenAI just raised $110b though. And how sustainable is NVDA's immense profits if this bubble actually bursts?
- Kina 7mo agoIt did not raise $110 billion. According to their own SEC filings $35 billion of Amazon’s funding is contingent on “(i) OpenAI meeting specified milestones, and (ii) OpenAI directly or indirectly consummating an initial public offering or direct listing of equity securities in the United States”
- lelanthran 7mo ago> 5 billion doesn't look like much when OpenAI just raised $110b though. Just about all of the AI providers "raises" are a fraction of the reported "raise", like this one. They didn't "raise" $100b. They got commitments for $35b, with said commitments being dependent on meeting certain criteria. Every "raise of $FOO" I've seen in the past year or two has not resulted in them getting their hands on $FOO in cash to spend.
- junofan 7mo agoYou might be surprised to learn that there isn’t even $100b of cash [1]. Some sort of commitment structure necessarily substitutes. [1]: https://fred.stlouisfed.org/series/USDIVCA https://fred.stlouisfed.org/series/USDIVCA
- deafpolygon 7mo agoI can hardly believe that this is legal. They’re basically committing money that doesn’t exist just yet.
- lelanthran 7mo ago> I can hardly believe that this is legal. They’re basically committing money that doesn’t exist just yet. What do you mean "just yet" :-) I don't really know how likely it is that the money being committed will actually exist when the time comes (Softbank's commitment didn't exist, they had to sell off assets and rope in other investors to meet their commitments). Maybe it is very likely to exist, but, really, who knows? IOW, your statement would be equally true by ending the sentence at the word "exist".
- deafpolygon 7mo agowould the correct read of this situation that they’re betting on the AI bubble popping?
- lelanthran 7mo ago> would the correct read of this situation that they’re betting on the AI bubble popping? I really cannot tell. To be frank, I seriously doubt that they can tell either.
- jmalicki 7mo agoVault cash are actual bills in vaults. It doesn't even include the bills in your wallet or under your mattress. It's small because few people go to the bank to withdraw a suitcase of $100 bills, it's a weird time series to pull up because it's not really indicative of anything outside of narrow interests for regulators and the mint - it's probably some conspiracy theory trope from crypto bros or something. Most money exists purely in electronic form these days. Monetary base [0] which includes the digital money banks have on deposit at the Fed, is over $5 trillion, and even that is tiny compared to M1 [1] which includes the kinds of things backing your money market account, which is around $19T. When money is invested, they're going to wire it, not pull up with wheelbarrows full of bills. 0. https://fred.stlouisfed.org/series/BOGMBASE https://fred.stlouisfed.org/series/BOGMBASE 1. https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL
- steveBK123 7mo agoIf the bubble bursts, having more money in OpenAI is worse for NVDA..
- glimshe 7mo agoThey could buy back stock or, God forbid, pay good old dividends to investors instead of throwing money away.
- SkyMarshal 7mo agoWhy would paying dividends not be like throwing money away for Nvidia, considering the alternative is to reinvest it into Nvidia's R&D, hiring & training, etc. Investors are already happily making money on NVDA stock appreciation, so what more would they gain from paying dividends?
- xnx 7mo ago> God forbid, pay good old dividends As I understand it, stock buybacks are basically a better (tax advantaged) way to pay dividends
- vessenes 7mo agoAgreed. I will add NV has product dominance - they don’t need to buy strategic MFN supplier status - why not deploy capital elsewhere?