Big tech is just trading the same $100b between each other to generate infinite shareholder value.
Man that reminds me of an old comic where two guys give each other the same $50,000 back and forth to eat horse shit and in the end their like, “we just created two jobs and grew GDP by $100,000!” Lol
Me: Come on, pop already. There are funds betting on AI bubble burst, ready for me to invest in.
If you want to get advantage from a speculative fund making a bet on a popped bubble, then you need to be already invested now, before the bubble bursts. (And also, you/your fund need to be right that it’s really about to pop now, and not later)
Once the race is over it’s too late to bet on the ponies.
Wall Street is Enron now. It’s a house of cards
If a company says they are not like Enron, it means they 1000% are exactly like Enron
Yeah. Enron’s scheme was trading money back and forth with itself to inflate its value until it all came crashing down, tanking Enron.
Nvidia is at the center of a scheme involving the entire economy trading money back and forth between a few companies to inflate value, so when the scheme tanks it’ll crush everybody.
NVIDIA isn’t Enron but they definitely are Cisco.
My “We’re totally different from Enron” accounting report has a lot of investors asking questions answered by the report.
Just tell me when the memory shortage ends.
Nvidia definitely isn’t Enron. It’s all of Nvidia’s customers that are mini-Enrons.
Enron crashed because they were cooking their books and faking income, declaring potential profit where none existed.
That’s not Nvidia. Nvidia is selling actual product as fast as they can make it at whatever price they want to charge.
Nvidia’s customers, on the other hand, are the ones who have to justify buying billions of dollars of product from Nvidia and explaining how they plan to make a profit from that.
Enron crashed because they were cooking their books and faking income, declaring potential profit where none existed
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Sell chips to X
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Receive stock in X
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Value of stocks = discounted sum of future (fake) income
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Booked as an asset on the balance sheet
This is exactly like Enron but the underlying commodity isn’t energy, it’s compute.
Nvidia sells plenty of GPUs for actual money, they are good for it.
No, the real issue is the depreciation for the people owning GPUs. Your GPU will be usable for 4-6 years, and 2-4 of those years will be spent as ”the cheap old GPU. After that time, you need new GPUs. (And as the models are larger by then, you need moahr GPU)
How the actual fuck do these people expect to get any ROI on that scale with those timeframes? With training, maybe the trained model can be an asset (lol), but for inference there are basically no residual benefits.
That’s Michael Burrys thesis. Higher depreciation for GPU owners is a positive for Nvidia because they end up buying more GPUs.
I’m highlighting the the future revenue of those customers that Nvidia has booked in terms of equity. That is equivalent to Enron. Here the SPVs are named companies like OpenAI and other model developers.
I feel like what sounds personally insane to us (and is, don’t get the wrong idea), to the people making such decisions the situation is more like -
“Emerging market with unknown upside thanks to new and evolving capabilities, exploration and competitive advantage shaped and constrained, globally, by hardware capability. Not my money I’m betting, ‘risk’ is extreme opportunity for me, negative consequences borne by others. Let’s go”
I’m still rocking a GTX970 from 2014
Do this:
- Calculate the total power cost of running it at 100% load since 2014
- Calculate Flops/Watt and compare with modern hardware
- Calculate MTTF when running at 100% load. Remember that commercial support agreements are 4-5 years for a GPU, and if it dies after that, it stays dead.
- In AI, consider the full failure domain (1 broken GPU = 7+ GPUs out of commission) for the above calculation.
You’ll probably end up with 4-6 years as the usable lifetime of your billion dollar investment. This entire industry is insane. (GTX 1080 here. Was considering an upgrade until the RAM prices hit.)
And the companies faking revenue instead of profit.
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NVIDIA is producing and delivering GPUs. However this does NOT translate into income, and that’s what’s making it shady. These companies are paying in shares that will be worth nothing when it pops.
It depends on the customer. Microsoft, Google, Amazon all have the revenue to carry the debts they are taking on. Oracle, Chat GPT, Musk and others are waay more sketchy.
The build out is going to take billions of dollars and these companies aren’t going to see a return for at least 5 years or more. The majors can carry that kind of debt load long term even if AI doesn’t pan out. Other businesses will struggle or go under if AI doesn’t bring the returns.
The next major movers will be companies that do a lot of IT business consulting like IBM. They are going to be busy helping non IT focused firms incorporate AI into their business model.
Finally if all these data centers pan out and the US keeps oscillating between shunning Renewables or Fossil fuels every time a new party comes to office we are going to have major problems with our energy infrastructure. Think energy bills as high as your mortgage within the next 5 years. Invest in utilities or energy companies and try to put solar and some kind of storage on your home.
OpenAI is more like Enron that NVidia I would assume.
Nvidia is Cisco in this analogy
That’s such an Enron thing to say.
The irony that nVidia just shifted the narrative from “not enough chips” to “not enough energy” is insane.
I bet Enron also claimed it wasn’t Enron.
A second order Enron you say?
You can do everything right and still have the curse of investor overconfidence placed on you.
Huang has been complaining for some time that doing well doesn’t result in stock gains, but the actual problem is the stock price is way too high so doing well does nothing for investor expectations.
This is when you sell shares because they no longer have any upside potential.
It sucks for companies though, but the fact is nvidia is overvalued at a 4.5T market cap.
In some ways the victim of their own success, that’s just the way this system is built, for better or worse (mostly worse). The incentives drive the behaviour, but the architecture is hostile in nature, so it’s hard to have different outcomes at a certain level. Infinite growth is literal cancer.
Enron was cooking the books hiding huge deficits, and spending the money from the workers pension funds, so no Nvidia isn’t Enron, but that doesn’t mean it’s all good.
Enron was the absolute worst, only matched by the Bernie Madoff pyramid scheme and the Bankman Fried crypto fraud.Saying you are better than that is a very bad look.
Joke aside, that’s kind of the vibe it gives off.
You can’t steal from employee pensions if you don’t offer a pension
Especially since they made the comparison on their own! Relevant article: https://www.wheresyoured.at/nvidia-isnt-enron-so-what-is-it/
does Nvidia have any competitors? I don’t think Nvidia can go bankrupt
Nvidia has cuda. Most ai only used cuda so only uses nvidia, but people are working too get over that particular moat
Nvidia has competitive edge. They won’t go bankrupt but they they will undermined heavily when the AI bubble pops.
You can never be too big to fail
P.S. No, I’m not saying that Nvidia’s going bankrupt
If you have to protest the insinuation as the CEO of a company in a public forum…Then I think the accusation has already found enough root to at least contain more than a grain of truth. The phrase “He doth protest too much” comes to mind.
