YHK - yet another hacker news clone

Isn't vendor financing a common business practice to finance the cost of equipment? What makes it nefarious in this instance?

They are definitely in NVIDIA’s own rooms! It’s like, they invest $1 in AI companies, that pay back NVIDIA $100 for GPUs. If you draw the lines you will see something that looks a bit like an ellipse. Or maybe a boomerang path. Or like, a 2d sphere. A bit frustrating we don’t have a simpler word for such a shape

Shush there! Don't ask any difficult questions!

The Fed is printing them. Just like they print all other money.

From the article:

> I put in one, and a hundred comes back.”

> The figure was rhetorical, not a disclosed 100-times investment return.

There's a lot more words in there, but it doesn't seem to say anything else.

The future we want. Not the wasteful F-35 'Fat Amy' lemon future noone except the fighterjet mafia wants..

Inflated valuations, mostly.

And this is the actual problem. I can't see framing it as a ratio as anything other than an attempt to mislead. What do you predict will happen when the market deflates? Whether or not a segment will behave like a line of dominoes and catastrophically implode is the question.

As I understand it they are risking that even if the major AI labs fail all the compute capacity that's been built out will remain in demand at sufficiently high prices.

You do realise it’s not a fixed pie right?

> Where are those 99$ coming from?

If this isn't a house of cards, AI companies' customers. The companies and individauls ponying up for a Claude subscription or compute through OpenRouter.

Customer financing isn't inherently fucked. It's just highly suspect at the scale Nvidia's doing it. There was another thread where I noted that Nvidia's investments are literally monetarily significant, to the point that I expect them to start being directly referenced in the Fed's beige book [1].

[1] https://news.ycombinator.com/item?id=49673871

> Where are those 99$ coming from? Who is actually paying this money?

Companies who pay 99$ to make >99$ in return. I am not saying it works in all cases but that's the idea when you pay for stuff as a Company.

> Because it seems like so far everybody is losing money with no reversal of this trend in sight

I am not sure what you are seeing. Anthropic (as one of only two major companies that do just AI) is starting to return profits, while demand for AI is accelerating and, clearly, compute is maxed out. And I mean: On the entire planet. They are turning profits despite being in full buildout mode.

>Who is actually paying this money?

You, when their circular financing scheme fails and you're the one left holding the bag as your government says "they're too important to let them fail".

Every $1 they invest brings back $100 in their valuation maybe.

> The figure was rhetorical, not a disclosed 100-times investment return.

seems no one is reading the article..

Its definitely consistent over the past several years.

> It is a smart strategy on their part.

No, it's a high risk gamble.

If the market grows enough they will win the bet, but if the market doesn't or we get a recession that dries up capital they will be holding the bag.

In a very narrow sense it may be true that Nvidia expects to make some multiple of the money invested (unlikely to be 100x but whatever). But you can't talk about that without talking about the wider economy. If the wider economy, and especially the pension funds putting money into the scheme, cannot sustain this, it'll eventually collapse and then everyone including Nvidia will lose lots and lots of money.

It is always about scale. At scale today's Nvidia does anything is so big that 100x is not anymore reasonable. Or then it is not significant...

From sub million to hundreds of millions I could theoretically see. Even tens of millions to billions. And even then I would be extremely skeptical.

But with Nvidia we are talking somewhere in the scale at tens or hundreds of billions. And that is actually very large sums of money. Even if it often does not look like it.

The only metric by which they are the largest company in the world is valuation. There are thousands of companies more important to your daily existence than Jensen's leather jacket factory.

They are also talking out of their asses, as they are massively overselling their capacity, and everyone is on a 5 to 10 year backlog.

After the downfall - it will be prosecutable. Of course before that we (simpletons) will have to pay for those companies to avoid “economic collapse”.

> Enron but completely legal

Nvidia's financing is disclosed. Enron lied about its schemes. I've also seen zero evidence that Nvidia is extending this credit to related parties to put in sham orders–that was part of Enron's shtick, too.