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Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom
- 484994949595 2mo ago[flagged]
- Mistletoe 2mo agoIsn’t that just what people tell themselves at the top? https://www.currentmarketvaluation.com/models/s&p500-mean-reversion.php https://www.currentmarketvaluation.com/models/s&p500-mean-re...
- uncivilized 2mo agoYou're saying people tell themselves at the top that the run can continue for another few years?
- wmf 2mo agoThat's how every bubble works.
- paradoxyl 2mo ago[flagged]
- root-parent 2mo agoI just have a AWS Lambda function, who tracks if Pieter Thiel private plane is doing a run to New Zealand...
- rwyinuse 2mo agoIn case you didn't notice, nobody has invaded Russia since Hitler. Instead it has been Russia invading other countries, using whatever imaginary threat as an excuse. You may be right about WW3 in 2030, but based on the track record it's more likely that Russia will be the invader.
- AnimalMuppet 2mo ago> I predict a 2030 end date for the bubble... Plausible. > ... as that is when many globalist think tanks declare they will invade Russia to take their resources, and it's unlikely even China can ignore that, and here comes World War III. Complete nonsense, for several reasons. 1. Are you saying that think tanks are saying now that they will invade Russia? If so, I want to see your sources. Or are you saying that you are confident now that think tanks will later say to invade Russia in 2030? If so, I want to see your logic. 2. "Think tanks declare they will invade Russia". Think tanks don't invade anybody, because they don't have armies. Think tanks can say whatever they want; they have to get someone with actual armies to agree. 3. Nobody with an army wants to invade Russia, resources or no. Russia is a terrible place to invade. It's too big, too far, too much strategic depth. 4. Current Russian military doctrine says that an invasion that is succeeding will be grounds for using their nukes. That probably won't mean just tactical nukes. If the military or the think tanks want any part of that, they're incompetent. 5. The resources are more in Siberia than in European Russia. The most likely successful invader would be China (if they're willing to run the risk of the nukes). If the globalist think tanks think that they are going to benefit, they aren't thinking.
- aurareturn 2mo agoWhy is it a big deal? Nvidia invested $2b into CoreWeave for 9% equity stake. CoreWeave is spending $35b in CapEx in 2026. Therefore, Nvidia's investment is only 5.7% of CoreWeave's single year CapEx. The other $32b is coming from other sources that isn't Nvidia. This is hardly circular. Nvidia invests in Neoclouds because it's a hedge against hyperscalers having too much power, ie designing and prioritizing their own chips, and not fully using Nvidia's rack design. Neoclouds give hyperscalers competition. Neoclouds accept Nvidia investments because it allows them to secure Nvidia chips first, which is a competitive advantage since new Nvidia chips have been as much as ~5-20x more efficient than old Nvidia chips. Nvidia was planning to directly compete against hyperscalers through DGX Cloud. They cancelled public DGX Cloud access when they found that investing in Neoclouds would accomplish the same goals without having to compete against their biggest customers. If you're Nvidia, it's smart because Neoclouds that you have a large stake in will deploy your full stack from GPUs to networking to storage racks. They will share valuable usage data back to you so you can design a better next generation. Hyperscalers are likely a lot less cooperative, prefer to use their own designs if possible, and will guard their usage data.
- KaoruAoiShiho 2mo agoYou're probably just responding to the headline but this person is an AI bull and isn't claiming it's a big deal, she's going into it and explaining it.
- aurareturn 2mo agoIt's a bad headline because most of the article isn't about circular financing and it's only 5.7% of anyway.
- gyanchawdhary 2mo ago[dead]
- hirako2000 2mo agoJust the look and feel and the subscribe fixed position in particular, made me bounce.
- charcircuit 2mo agoWould this author prefer that Nvidia buy equity using GPUs directly? I don't think it actually counts as circular.
- re-thc 2mo ago> I don't think it actually counts as circular. It is. The GPUs go on to be used to get loans to then get more GPUs.
- anon291 2mo agoAll financing is circular. This concern is beyond the pale contrived Financing is circular because creating a liability for one party (debt) creates an asset for another (the bank) off of which more debt can be secured A bank / financier sells trust and reassurance. They otherwise invent most money from thin air.
- lokar 2mo agoThat’s not the point. The issue is that loaning/investing to a client so they can buy from you conflates your investments with your revenue. It may be fine, or not. It it has been a frequent type of manipulation to obfuscate the real accounting situation.
- philipallstar 2mo agoPeople are investing because if Nvidia are essentially buying shares with graphics cards then they're motivated to make this stuff work. If the invested in company's share price tanks, Nvidia loses out, and I imagine quite a few people are willing to win or lose alongside Nvidia.
- lokar 2mo agoIn general for these deals, and the ones with SPVs even more we don’t know. It may be as straightforward as equity for GPUs, but not enough information has been released.
- InsideOutSanta 2mo agoYeah, it's basically creating the illusion of demand and revenue. Lots of fraud in the past relied on companies "investing" into companies which then bought from the investor. I'm not sure to what degree this is happening now, though, and to what degree this is benign.
- lokar 2mo agoI’m not sure anyone can really say now, the terms and details are too opaque. But, given the history the opacity is itself a red flag.
- bwfan123 2mo agoCircular financing is a dead horse - dont beat it. Instead, what is more interesting could be: Is there a path to these builds becoming economically profitable ? Towards this, some metrics to watch are: 1) ROI per token per dollar 2) Enterprise token budgets. And at what point there is an overbuild relative to the token roi. Alternatively, pressure on token costs due to the open weights models etc.
- wmf 2mo agoThese questions can't really be answered now because things are moving too fast. That may explain why people are latching on to things they can prove like circular financing even if those arguments are pretty weak.
- 484994949595 2mo agoif the money moves in circles the consequences of new money stopping when predicted profitability falls become a lot more dramatic
- brookst 2mo agoall money moves in circles, it's just a question of number of stops. think about stuff like pork barrel funding for aerospace, which props up jobs, which generates funding for political campaigns that perpetuate pork barrel funding.
- Night_Thastus 2mo agoIMO, it can be profitable - but only at the business level. A business with many software devs can pay the steep price for access. For almost everything else, the answer is no. No one else would pay the real costs to run them. It'll require the whole industry to shrink down massively compared to what we're seeing now - down to a profitable (and much smaller) core.
- bwfan123 2mo ago> For almost everything else, the answer is no. No one else would pay the real costs to run them. It'll require the whole industry to shrink down massively compared to what we're seeing now - down to a profitable (and much smaller) core. If there is any data to support this, please share.
- dainiusse 2mo agoYandex, not nebius. Surprised how the world gets on kgb again and again, and again
- brikym 2mo agoDidn't they move to escape that world?
- kristjank 2mo agoNo one ever leaves the kgb
- senshan 2mo agoKGB: entry -- ruble, exit -- two
- angulardragon03 2mo agoYandex’s parent holding company was Dutch, and Nebius is now the same. A lot of their employees were effectively transferred between the two. Nebius is basically still just Yandex, just rebranded and legally a different entity. It’s also by many accounts a bit of a weird company to work for, but they can afford to pay above-market for many roles.
- dainiusse 2mo agoYou can even check their stock ticker...
- spwa4 2mo agoNot too well known, but Yandex very suddenly moved almost all of their employees + families to Israel, and then on to the Netherlands (where they already had an office and a company called "Nebius" to avoid sanctions against Russia) and US. Certainly looks like they were trying to get out, and were rich enough to actually pull it off (that can't have been cheap). Also they deserve some serious kudos for actually trying to protect them.
- RetroTechie 2mo agoMight be a blessing in disguise that these companies can't roll out datacenters as quick as they want (due to financing, power issues, permit delays or whatever). That puts a cap on surplus (potentially unused?) datacenter capacity that's around by the time the AI bubble pops.
- khurs 2mo agoBlessing in disguise for who? Any surplus after a pop will be sold for market value and lead to more new cloud provider startups and co-location options.
- Der_Einzige 2mo agoThere is no AI bubble. The underlying fundamentals do in fact line up with the market. The faster you realize this will never pop, the faster you realize that you too can make money in the biggest gold rush in human history.
- lowsong 2mo agoThe faster you realize this will never pop, the faster you realize that you too can make money in the biggest gold rush in human history. Hey, yeah, quick question. How did the historical literal "gold rushes" end? Gold worth tens of billions of today's US dollars was recovered, which led to great wealth for a few, though many who participated in the California gold rush earned little more than they had started with. The human and environmental costs of the Gold Rush were substantial. Native Americans, dependent on traditional hunting, gathering and agriculture, became the victims of starvation and disease, as gravel, silt and toxic chemicals from prospecting operations killed fish and destroyed habitats.[0] So you're saying a select few will become fabulously wealthy while most will gain nothing, and in exchange we'll destroy the environment and kill many more people through side effects? [0]: https://en.wikipedia.org/wiki/California_gold_rush https://en.wikipedia.org/wiki/California_gold_rush
- ahoka 2mo ago"Capitalism is an economic system based on the private ownership of the means of production and its use for the purpose of obtaining profit."
- mschuster91 2mo agoI've said it before, I will say it again: all that circular investment, all the IOUs, all the billions of dollars of money that are floating around in the entire AI web... it will seriously wreck the US economy, the volume is orders of magnitude worse than what caused the 2007ff global financial crisis. But if OpenAI and Anthropic both manage to enter the fray as well and automatically get made part of the NASDAQ and MSCI World like SpaceX already did... yeah, then it will fry the US pension system alive as well.
- janderson215 2mo ago>> the volume is orders of magnitude worse than what caused the 2007ff global financial crisis. Nobody lives in GPUs and what was the ratio of equity/debt for the toxic assets in 2007?
- simsla 2mo agoIt looks more similar to the 1929 crash to me, where "too big to fail" blue chip stocks were overinvested and overvalued, and the value adjustments rippled through the rest of the economy. If NVIDIA does get a meaningful value adjustment downwards, it'll probably survive, but it'll impact the S&P500. People will need to sell off other stocks to cover the losses, etc. etc.
- montyanderson 2mo agonvidia's forward p/e is 24. walmart's is 39.
- deleted 2mo ago[deleted]
- psvv 2mo agoThat seems to indicate the market is more confident in walmart's earnings than nvidia's.
- leonidasrup 2mo ago
- bertili 2mo ago[dead]
- ilaksh 2mo agoDumb question, but when the Nebius capacity dashboard says they have around 3 non-preemptible B200s available, does that mean _total_, or is it just how many I myself might be able to rent on demand? One aspect of the profitability might be the utilization and the pricing a few years down the line for slightly older hardware. Already now it seems like the increased processing you get from newer devices versus the cost difference makes something like an H100 or even A100 significantly less desirable than newer more powerful ones. As an individual, I am happy to be able to get an H200 on demand, but the B200 or B300 can do so much more work with optimized software and models for only modestly more cost that if those become available then from a business perspective you really have to prefer that if you can keep it occupied. Then with Vera Rubin being like 3 times more effective or whatever, that adds a new layer of gradual obsolescence. So the question is can they keep the pricing up on the older ones a few years down the line enough to fill out the end of those expected payback periods. The real boogeyman for a neocloud that has heavily invested in expensive Nvidia hardware might be a variation of that beyond Nvidia with startups that have even more dramatic efficiency increases pushing the leading edge even further. For example, if companies like Mythic AI and d-Matrix could somehow rapidly rapidly scale, that would push prices down for all of Nvidia hardware that is significantly less efficient. I guess so far it doesn't look like any startups with really big efficiency breakthroughs are even close to being able to scale like Nvidia though, especially with the manufacturing and power crunch. But I suspect some of that is because of favoritism and strong arming protecting investments rather than a free and fair ecosystem.
- mNovak 2mo ago> So the question is can they keep the pricing up on the older ones a few years down the line They don't expect to keep the prices flat over time, and everyone involved will have planned for this. Prices are highest when they're the newest and greatest (part of why it's valuable for neoclouds to be first in line for new models), and drop year by year as newer GPU models can do equivalent work at lower cost. You can see a pretty cool dataset of this at [1]; H100 prices where $3/hr in 2023, and dropped linear-ish to $1.75/hr by 2025. And also the notable exception that prices are up this year due to shortage. [1] https://semianalysis.com/gpu-pricing-index/ https://semianalysis.com/gpu-pricing-index/
- cmiles8 2mo agoIt’s all fine till it’s not. Then it’s a gigantic financial house of cards that comes crashing down.
- yalogin 2mo agoI don’t know if the circular financing is a problem. NVIDIA is the best my name in town, any company has to spend on NVIDIA assets for their compute. Now that makes NVIDIA rich and so they don’t know what to do with their money. They are just propping up companies they find interesting
- ulfw 2mo agoThis bubble bursting will make us all poor
- eb0la 2mo agoI have the same feeling, but after reading this report I believe big hyperscalers will survive the bubble when it pops. Now I've got the feeling they don't have huge amounts of GPUs sitting in their DCs, but rented for Opex. In case the bubble pops they might get it at discount as CapEx (like Amazon did with dark fiber after the dotcom bubble).
- darksim905 2mo agoThis isn't really related to the post, but I need to vent I suppose. CoreWeave feels very YC-ish. I thought I had an in as a referral for a position there and got interviewed by someone who knew a lot of my peers where I worked. Dude seemed to ask very textbook style questions that you would only learn if you went to a school system for this particular position/subject. I guess I didn't answer to their satisfaction despite knowing more than them on almost everything else. I suppose I'm still bitter seeing as I interviewed with them three times for two different roles. Absolutely wild.
- TrackerFF 2mo agoCould it be that someone there just didn’t like or vibe with you? FWIW, I’ve referred someone 3 times to the same position because I’m very sure he would be a good fit, and I’ve seen his work. But for trivial reasons (“He doesn’t seem enthusiastic enough” and “the other candidates are better at promoting/selling themselves”) , a couple of managers that are above me in seniority (and directly in the hiring loop) just refuse to pass said person. In the end he’s stopped applying, and I feel shitty for referring him.
- MasterScrat 2mo agoHow is what you describe "YC-ish"?
- hasmolo 2mo agothe interview process was rewritten at coreweave by a bunch of hired google engineers to reflect the rest of the industry about a month before they went public. at the time they were prepping for IPO they started to hire from other fortune 500s aggressively, and the whole company went from startup to same shit as the valley over about 6 months. when i interviewed the process was shockingly simple, like literally tell me how to fetch json in go, and by the time i left it was 6 rounds targeted to take two months.
- darksim905 2mo agoThat sounds horrible. Big yikes. Everyone wants to be Google without putting in the work. They could've just pulled a CapitalOne and used a HireVue assessment to filter people out with the same results and less frustration.
- shevy-java 2mo agoWith the rising prices of RAM, I feel these companies owe us money - in particular NVIDIA. I feel that the "free" market is not working when you have de-facto monopolies, as is the case right now. The AI explosion exposed that problem. Why are politicians not doing anything? Too bribed already?
- RetroTechie 2mo agoWhat? You can go out & buy whatever RAM you want. It just requires willingness to pay more than Nvidia & friends. That's how markets are supposed to work. Manyfacturers aren't artificially restricting supply, they're running fabs full-tilt. You could want them to build more fabs to meet demand. Which they are, but at a more modest rate than what you would want, because those manufacturers have been burned in previous boom-bust cycles. Never mind that fab-construction lead times are measured in years. And what's stopping you from fabricating & selling RAM? I've read it's very profitable! Oh yeah, it takes many $B to pull a SOTA fab out of the ground. Vendors price-gouging? Probably. Wouldn't you? TLDR; it's not a monopoly issue. This is a high-tech specialized market where a ridiculous spike in demand is near-impossible to cater for. You want some new RAM-heavy gadgets? Shell out $, adjust your RAM 'wants', or be patient.
- Capricorn2481 2mo ago> You can go out & buy whatever RAM you want. It just requires willingness to pay more than Nvidia & friends. That's how markets are supposed to work. Ram was a commodity and now it's not. Markets are not supposed to decommodidy things because a single company got so big that it could buy half the worlds supply. That's not a normal situation or a healthy market, and people can feel however they want about it. They had a previous good taken from them.
- obligor_io 2mo ago[flagged]
- fHr 2mo agobro if I get a cent for every time the bubble and circular finance guys tell me it's all fraud and we crash in 3 2 1, I would be richer then going long memory...
- Aboutplants 2mo agoDoes AI end up being much closer to a Crypto style result late 2010’s-early 2020’s) or is it closer to the Web style late 90s landscape? Both had somewhat similar early outcomes for a lot of the initial front runners with some experiencing legal issues and others collapsing due to sketchy finances. Crypto ended up not being as earth shattering as most believers wanted it to be but there are still many billionaires and large companies that exist and continue to churn profit. Will a similar fate exist for AI companies? A few large winners, lots of large/medium/small losers (with some taking the legal and financial hits) but a decently large industry (not earth shattering) survives and establishes to simply be a small piece of the greater economy rather than the primary driver as most AI truthers believe?
- Synaesthesia 2mo agoI think it will be like the 90's collapse but bigger. It must be noted that the financial markets have been awash in cash for some time since companies have been making huge profits since the 90's. So the money that will be lost will mostly be that of rich investors and large companies who were sitting on a bunch of capital they didn't know what to do with.
- snovymgodym 2mo agoIf I had to guess, probably Web-style. LLMs are actually useful, people are willing to pay for access to them, and they do genuinely enable things that were unrealistic or impossible before. The advances in image, video, and sound models since 2020 are also striking but likely won't be as transformative as LLMs. That being said, I don't think it's unlikely that we'll see a plateauing of progress followed by a strong crash/correction in the market a-la dot com. The Allbirds situation absolutely has echoes of pets.com. I also feel that commodification is coming for models, training/inference hardware, and software (e.g. CUDA), as it has for nearly everything else useful in tech. So I expect valuations driven by unique advantages here to be eroded over time (Think Sun and SCO after Linux on cheap x86 servers became the norm).
- priscal01 2mo ago[dead]
- anigbrowl 2mo agoYou alarmists are getting all bent out of shape over nothing. Just think of this like the financial equivalent of a ring buffer or a doubly linked list, just good old data structures but with money instead of data. Nothing can go wrong with this, these things were designed by top people. Top people. /s because Poe's law is increasingly inescapable
- guillaume_code 2mo ago[flagged]