Yet another Hacker News

127 points tolugenius 1 hour ago 98 comments

tolugenius 1 hour ago | parent

epsteingpt 1 hour ago | parent

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.

amelius 1 hour ago | parent

And what is TSMC in this analogy?

tccole 1 hour ago | parent

Idk… government bonds or something?

creativeSlumber 1 hour ago | parent

do they lend money to their customers to buy their own chips?

aeonik 1 hour ago | parent

The currency press operator and manufacturer.

bigyikes 1 hour ago | parent

What’s upstream of the central bank? …Congress?

itsalwaysgood 1 hour ago | parent

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.

overcast 1 hour ago | parent

ASML is the foundation. Without them, none of this would exist.

petcat 1 hour ago | parent

I think we can go even further and say that IBM, Zeiss, several Japanese companies, and even the US Department of Energy are the actual foundation since ASML is largely just an integrator of many different technologies they license from elsewhere.

amelius 46 minutes ago | parent

If TSMC is a platform, then why doesn't it have an App Store?

jubilanti 42 minutes ago | parent

They do, you only get access to it if you're comissioning chips.

JumpCrisscross 43 minutes ago | parent

> And what is TSMC in this analogy?

The mint?

treebeard901 1 hour ago | parent

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.

yieldcrv 1 hour ago | parent

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

Avicebron 1 hour ago | parent

Money is a lot like mass, it has it's own gravity.

thrownawaysz 1 hour ago | parent

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.

CuriouslyC 1 hour ago | parent

AAA gaming is cooked, and AMD/Intel is plenty able to support indie to AA needs.

12ha6 1 hour ago | parent

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.

Synthetic7346 1 hour ago | parent

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

c0balt 1 hour ago | parent

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.

traverseda 1 hour ago | parent

Eh, AMD makes a lot of video game console SoCs. If you look at the steam hardware survey most people are running ancient computers.

raincole 1 hour ago | parent

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.

thrownawaysz 1 hour ago | parent

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

raincole 1 hour ago | parent

Thank for explaining what DLSS5 is! I don't think it has anything to do with "Nvidia is going to give up gaming market" narrative though.

rootusrootus 57 minutes ago | parent

An alternative example would be Apple & the Mini 12 & 13. They made money on those, too, but here we are.

jmalicki 56 minutes ago | parent

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.

chis 46 minutes ago | parent

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.

redox99 1 hour ago | parent

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.

bigyabai 1 hour ago | parent

> 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.

the8472 1 hour ago | parent

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...

bigyabai 49 minutes ago | parent

> that market was always fickle due to ASCIs.

The GPU crunch came because cards like the 3060 were extremely cheap and could outrun most sub-$1000 ASICs at the time. The dedicated crypto GPUs were too-little too-late; hundreds of thousands of ordinary CUDA-capable GPUs had already been repurposed for mining by the time they launched.

Waterluvian 1 hour ago | parent

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.

delusional 1 hour ago | parent

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.

Waterluvian 59 minutes ago | parent

Gaming is a larger market than Hollywood. Maybe it becomes a distraction for Nvidia, but someone will step in. That might actually be a good thing and why Nvidia wont do that: it creates an under served market in which newcomers can cut their teeth.

bubblemoth 42 minutes ago | parent

I think we would see an increased push towards cloud gaming. That's probably what Nvidia would want.

Espressosaurus 35 minutes ago | parent

Much of the gaming market is phone games however, not traditional consoles or PCs.

Edit: about half in fact! The rest is shared between the other traditional gaming types.

JohnMakin 41 minutes ago | parent

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.

soulofmischief 24 minutes ago | parent

We wouldn't be here today if the video game industry hadn't continued pushing the envelope for decades.

jayd16 40 minutes ago | parent

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.

selectodude 59 minutes ago | parent

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.

Espressosaurus 42 minutes ago | parent

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.

selectodude 5 minutes ago | parent

Hermes still makes saddles that are somewhat reasonably priced compared to their handbags.

It's still profitable, it's their original raison d'etre, and there's no real reason for them to stop even if it its rounding error on their regular business.

Probably will never, ever see an Nvidia card with >32GB of VRAM though unless they start making dies that lack LLM performance like the gimped ethereum mining cards.

nerevarthelame 57 minutes ago | parent

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.

pdpi 52 minutes ago | parent

> 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.

monster_truck 48 minutes ago | parent

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

noir_lord 34 minutes ago | parent

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.

jayd16 34 minutes ago | parent

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?

dexterdog 25 minutes ago | parent

Fraud?

Ecco 21 minutes ago | parent

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?

dismalaf 17 minutes ago | parent

> 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.

MachineMan 9 minutes ago | parent

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.

u1hcw9nx 1 hour ago | parent

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.

JumpCrisscross 44 minutes ago | parent

> 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

pwillia7 1 hour ago | parent

Should there be a LIBOR for 1GB VRAM set each morning?

Havoc 1 hour ago | parent

https://www.dramexchange.com/

quickthrowman 1 hour ago | parent

CME is launching futures contracts for GPU compute: https://www.cmegroup.com/markets/energy/power/compute-future...

anthonybourdain 1 hour ago | parent

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.

jskdkdkdkf 29 minutes ago | parent

snailcat has entered the chat

Mistletoe 1 hour ago | parent

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...

tonyhart7 1 hour ago | parent

just cashout at the peak, hedge fund manager probably

JohnnyMarcone 1 hour ago | parent

Where did you exit to?

tccole 1 hour ago | parent

As the saying goes. The market can stay irrational longer than you can stay solvent.

bogzz 28 minutes ago | parent

This phrase has reached the point of semantic satiation in my mind.

Maybe THAT'S the real recession indicator.

ama4efaria 1 hour ago | parent

hardware? yes Nvidia is software? Google is. AI = Data Data = Google

shnock 50 minutes ago | parent

Reading this makes me yearn for the ability to downvote comments

bogzz 27 minutes ago | parent

This reads like a SoftBank slide deck.

JumpCrisscross 54 minutes ago | parent

> 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...

sailfast 47 minutes ago | parent

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)

tonyhart7 37 minutes ago | parent

well, M2 money supply is increasing with or without AI industry

manlymuppet 33 minutes ago | parent

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?

cyberpunk 23 minutes ago | parent

NV gives out a $100 to Party A, who puts it in their bank.

Bank takes $90 of that deposit (assuming 10% fractional reserve rule, no idea what the actual number is), and loans it out to party B, who pays it into either the same or another bank. Same rules apply -- except now it's down to $81 being loaned out, and so on and so forth, until that 100$ generated $1000 in total bank deposits.

edit: of course, it's never actually directly like this, a lot of other factors are involved, maybe the money is spent, maybe no one wants to borrow it, etc etc -- so it's more complicated but that's I think what they mean

toenail 16 minutes ago | parent

0%. Zero percent is the actual reserve rule. https://www.stlouisfed.org/bank-supervision/reserve-administ...

manlymuppet 7 minutes ago | parent

That was my intuition at first too, but the original comment specified that they weren't borrowing all this money they're spending. The article also says how this is part of NVIDIA's strategy to enable demand, not create it, so supposedly these investments into their customers are actually going straight to paying for things.

Even if this money eventually gets loaned out eventually by one of NVIDIA's customers putting it into a bank, it isn't NVIDIA inflating the money supply, it's the borrowers, no? Or is this an ineffective way to look at things?

idontwantthis 21 minutes ago | parent

Private banks increase money supply by lending. If 10 people deposit $1000 in a bank, it can loan $9000 to an 11th person. Now the economy has $19000 total.

esikich 18 minutes ago | parent

The $9000 has to be paid back, and then some. I sure hope you aren't an accountant.

estearum 9 minutes ago | parent

Eventually

Which is, you know, the entire risk that people are worried about.

mastax 9 minutes ago | parent

But for the duration, there is more money. This isn’t some crank theory, it’s orthodox economics: https://en.wikipedia.org/wiki/Fractional-reserve_banking

theoreticalmal 7 minutes ago | parent

I learned about this concept in college macroeconomics. I asked this exact question and the TA said “yeah I guess repaying debt is like destroying money” as if they had never thought of that before. The idea of lending money increasing the money supply is definitionally true.

arcanemachiner 21 minutes ago | parent

Banks create money when issuing a loan. This is how fractional reserve banking works. They lend money they don't have (most of). This is institutionalized fraud, and it's been standard operating procedure for centuries.

conmod278 18 minutes ago | parent

But the fraction to be kept in reserve has been zero for 4-5 years.

The_Blade 14 minutes ago | parent

i love The Creature from Jekyll Island because it helped me earn a liaison with a gal at a bar who dared me to try by throwing Rothbard at me

haaz 30 minutes ago | parent

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)

einpoklum 7 minutes ago | parent

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.

jrmg 18 minutes ago | parent

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.

zbentley 7 minutes ago | parent

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.

dehrmann 4 minutes ago | parent

> load-bearing

I'm worried I'm going to start picking up claudisms, and then accused of being AI.

master_crab 9 minutes ago | parent

“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).

vkaku 48 minutes ago | parent

Market correction will happen. Banks go down and close during recessions. Hope these people are wise enough to see through these effects.

manlymuppet 39 minutes ago | parent

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.

gz5 4 minutes ago | parent

Interesting juxtaposition with Dario's/Anthropic's 'we must pace the frontier' missive today