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Nvidia dramatically reduces amount of OpenAI infra financing it may guarantee
- KurSix 2mo agoThe numbers have become so large that normal corporate risk management starts looking quaint
- 2773738384 2mo ago[flagged]
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- u1hcw9nx 2mo agoI would like to see the numbers. If Nvidia sells hardware for $100B with 75% cross margin, and provides $50 billion in backstop for that same hardware, it would be still be nicely profitable deal ($25B) if the backstop capacity would be a total write-off recovering $0. Reselling that capacity in some large discount below already low backstop price would increase the profits. It's all those pension funds, sovereign wealth funds and Softbank getting into that $500 billion deal that will be hurt.
- NewJazz 2mo agoBusinesses aim to make the most profit possible with their resources. If they can make a 25% margin that is good, but if they can turn around sell thr same thing for a 50% margin, that is much better. Basically what i am saying is maybe there is a better buyer than openai.
- ColdStream 2mo agoPretty much, I have said it for a while now, Softbank and Oracle are the ones I would be worried about. Both of them have put their companies wealth behind this, if it goes down so will they. Others have played it fairly smart in terms of insulating potential issues.
- throwaway27448 2mo agoA better world is just a few steps away
- pjjpo 2mo agoSoftBank has always managed to squeeze by after every mistake selling some early huge wins Alibaba, Nvidia, arm. Wonder if they still have any of those left in the back pocket.
- jgalt212 2mo agoIndeed, Masa has more lives than a cat.
- karlgkk 2mo agoHave you seen his investor presentations? He is no longer building his war chest and is now executing on SoftBank’s 400 year plan Goose value 71 here: https://group.softbank/media/Project/sbg/sbg/pdf/ir/investors/shareholders/2026/shareholders-meeting_46_05_en.pdf https://group.softbank/media/Project/sbg/sbg/pdf/ir/investor...
- selectodude 2mo agoThat shit looks like something that they’d show in a Netflix cult documentary.
- trollbridge 2mo agoThat was terrifying. This is representative of who's funding all of this?
- tdeck 2mo agoThis reads like one of those kooks who would post so many grandiose claims on a forum that eventually everyone stopped replying to their threads.
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- Noaidi 2mo agoThe Möbius strip of AI financing continues…
- sidewndr46 2mo agoit seems much more like Relativity by M. C. Escher where no one is quite sure how to exit without bringing everything down with them?
- nian2326076 2mo ago[flagged]
- formvoltron 2mo agowobble wobble
- behnamoh 2mo agoIn other words: the investments that were never going to happen are not going to happen.
- ColdStream 2mo agoWhile it is true they haven't lost anything, it does signal to shareholders, potential share holders and current VC's the direction of things.
- gymbeaux 2mo agoWhat would happen to Nvidia, Anthropic, OpenAI, if tomorrow someone released an open weights model on HuggingFace that matched performance and accuracy of Opus 5 running locally on an RTX 5070? That won’t happen tomorrow, but it will likely happen someday… what’s the plan beyond “don’t be the one holding the bags?”
- d_sem 2mo agoI guess I'd like to understand the technical reasoning on how you think an how an Opus 5 could over time fit on an RTX 5070.
- nl 2mo agoIt seems very very unlikely that an Opus 5 matching local model that runs on a 5070 will be released within the next 5 years (I don't want to say "ever"). If it does happen then NVidia will sell a lot of 5070s though!
- martinald 2mo agoNothing would really change IMO? 99% of users don't have anything like a RTX5070 (mobile especially). Even if it did, it still doesn't make much economic sense running a model locally vs on a datacentre. For example, I managed to just about squeeze a Q2 quant of Qwen 3.7 27b on my 9070XT. I get around 60tps decode (slightly faster prefill). _but_ it uses 300W of power to do so. At UK electricity rates of 30c/kWh this works out at something like 42c/MTok. I can get far far better models on openrouter cheaper than that, plus I'm not horrendously constrained on context length.
- protocolture 2mo agoI dunno a lot of things said about AI economics sound like an IBM executive making reassuring statements about their terminal/mainframe business before the personal computer took off. Like even if you run it in a datacenter in this scenario, you could do it on a cheap GPU instance in Azure, you still wouldnt need OpenAI or Anthropic specific clouds. >uses 300W of power to do so. There are plenty of people with phat electricity pipes in their on prem server rooms that have been vacated for cloud. Companies who want the benefits of AI but dont want the risk of sending their data to foreign API endpoints.
- nl 2mo agoIt's worth noting that this is deal that has never been signed previously. There's a release from DoE about it: https://www.energy.gov/articles/fact-sheet-department-energy-ensuring-affordable-energy-access-ohio-while-powering-future https://www.energy.gov/articles/fact-sheet-department-energy... That's a horrible amount of gas energy generation. https://www.datacenterdynamics.com/en/news/openai-in-talks-to-lease-10gw-data-center-from-sb-energy-in-ohio/ https://www.datacenterdynamics.com/en/news/openai-in-talks-t... has more details. The whole campus build could be as much as $500B. Would that be the most expensive single thing ever built? The ISS cost around $150B and is commonly said to be the most expensive single item, but that does include running costs.
- trollbridge 2mo agoYes, if this thing ever gets built, it will set a whole bunch of new records. If it doesn't get built, it will still set a bunch of records; some of them probably quite infamous. It is hard to describe the ridiculous scale they are trying to do there. For comparison, typical electrical demand is 17 GW and peaking to 25, with total generation capacity being 30 GW. That includes us-east-2, which is not a small data centre (consumes probably right around 2 GW, so represents about 10% of the state's power demand). So they're talking about a project that would increase total power consumption in the state over 50%... in addition to building multiple nuclear power plants to fund it. Predicting 2,500 permanent jobs in a county of 27,000 total people, so that's a lot of people moving in.
- KurSix 2mo agoThe permanent jobs number really puts it in perspective. You're not just dropping a giant data center into an existing community at that point, you're potentially reshaping the county around it
- tdeck 2mo agoI don't believe this permanent jobs number. Companies always inflate them for projects like this to win political concessions.
- senor_digimon 2mo agoThis is probably a lot more related to the fact they want to make GPUs an asset class. Nvidia is banking on the fact there will be an entire market that will guarantee whatever anyone needs.
- trollbridge 2mo agoA rapidly depreciating asset class of something that loses almost all its value in a few years and can't be repaired?
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- senor_digimon 2mo agoI’m just the messenger.
- lqstuart 2mo agoWorked for crypto altcoins, after a fashion, and these are almost entirely the same people
- trollbridge 2mo agoThe best part about the AI boom is how much less I have to hear about crypto.
- cmiles8 2mo agoNvidia is turning into a savings and loan company that happens to design computer chips on the side. What could possibly go wrong.
- JacobAsmuth 2mo agoWait until you hear about how airlines work, you'll start babbling about the rewards-points bubble
- cmiles8 2mo agoThat’s broadly known and at least they clearly account for it in their numbers, without all the “special financing vehicle” off balance sheet stuff that’s become common in the AI bubble era.
- fg137 2mo agoWell, they fully control miles and constantly devalue them. On the other hand, Nvidia isn't Federal Reserve yet...
- HDBaseT 2mo agoThe loans will just take longer to repay. There is a market for Anthropic & OpenAI, it just likely doesn't have the 200B profit each year required for the maths to make sense. If shit hits the fan, the companies collapse, then Nvidia gets their money from the investors anyways.
- Taikhoom10 2mo ago[flagged]
- fooker 2mo agoAll economics is circular financing, that's how it works. You pay Apple for a MacBook, Apple uses it to develop a better MacBook. What goes wrong is leverage. We haven't seen much hint of the 10x leverage kind of deals that brought down the house in 2008.
- Taikhoom10 2mo agoUh no, NVDIA helping startups get financing so they can buy NVDIA chips is inherently damaging because eventually the debtors will not help with the financing and startups will not be able to buy chips.
- fooker 2mo agoAgain, this is how all of economics works. A Toyota dealership arranges a loan for you. Through a bank for a used vehicle, sometimes through Toyota itself for new cars. A house builder will routinely take on part of the loan providing burden to get some of the interest. Even someone selling you their thirty year old house will often provide seller financing. You may have ideological opinions against this, which is fine. There are billions of people, for example that are fundamentally opposed to the idea of interest. But like it or not, this is how it has worked for the last ~500ish years.
- Taikhoom10 2mo agoNo, I get this; it is not a problem. It becomes one when they cannot pay back this financing, in the event that they cannot build a sustainable business, which they cannot, because the capital cycle leads to overinvestment, meaning the financiers cannot meet their returns. https://s-1.vercel.app/posts/the-capital-cycle-theory/ https://s-1.vercel.app/posts/the-capital-cycle-theory/
- chocolol 2mo agoEd Zitron might be right
- Ekaros 2mo agoHis numbers might be off or he might not have all of them. But still I can not escape that he is most likely correct. All of this equipment needs to be paid. With interest and profit. With the usual overheads that the companies run. And if more is being bought each year. It doesn't seem like one and done deal. And then just asking where will all that money come from is very good one. And one we should be very honest about.
- ReptileMan 2mo agoIf you have someone walking on tightrope over the grand canyon in stormy weather, you don't need the exact wind speed to make educated guess that the winner will be gravity. I think he is too emotional and overly sensational though.
- fg137 2mo agoI'm afraid I don't see "making educate guess" in AI boosters, including a bunch that are active here.
- xdertz 2mo agoI think he is wrong on the overall usefulness of AI but I have yet to see someone actually refuting his economic arguments.
- JacobAsmuth 2mo agoEd Zitron has not yet made a single correct prediction about AI :)
- chocolol 2mo agoDisagree on this. He predicted the change to token based billing and pull back on unlimited etc.
- robotresearcher 2mo ago'May guarantee' is an oxymoron I've never come across before. Mangled headline. The article title is "Nvidia scales back funding guarantee for Ohio OpenAI data center, WSJ reports".
- lucianbr 2mo agoMy thought exactly. "May guarantee" is meaningless nonsense. > Nvidia has revised its plans to support a proposed OpenAI data center project in Ohio and is now expected to initially guarantee less than $120 billion There is no actual information in this article. "Plan", "proposed", "expected", "initially", "less than". It's just a report on the thoughts of some people.
- ethbr1 2mo ago>> the Wall Street Journal reported on Friday, citing people familiar with the matter.
- lucianbr 2mo agoThe issue is "the matter" completely lacks any substance. "An insider told me NVidia spent 10 billions on hamburgers yesterday." "An insider told me NVidia is thinking about maybe spending up to 10 billions on hamburgers or some foodstuffs by 2050". Can you spot any differences?
- ethbr1 2mo agoThe former isn't of interest ti HN, the latter is, because we're current obsessed with the second derivative of hamburgers' growth curve.
- lucianbr 2mo agoMay be so, still your quote doesn't make any sense as a reply to my comment. "This article is about nothing". "Well of course it is, they say right on the page they talked to some people".
- elzbardico 2mo agoThose idiot VC fuckers along with Trump and his deliriums are driving us right toward something that will make 1929 look child's play.