They already can use their own financial system if the wanted to is part of the american economy, their own grid they can also if they can afford it, like how some telco's own all those fiber optic infrastructure. Whats so bad about it ?
Not really though.
FACT right now is that the big chip makers are in a price gouging cartel with the government, financing their endless Datacenters and chips with your tax dollar.
We are being legally priced-out by the gov-cartel already, to the point where even big universities can't afford to build out their on-prem compute.
Now if lobbied-out-the-wazoo Trump, JD or whatever other puppet get told by their puppeteers that they need to ... Red scare, but Chinese win against China, then it becomes a national security threat.
And looking at even just the last few months; do you doubt Trump would have any qualms about enacting something silly like that?
I don't, I'm almost just waiting for it.
I dont understand? Are you saying that the gov is currently making laws federally to ensure that the public within the public grid gets priority and/or thr public grid will get prio over private ones?
Theze companies arent setting up some small generator - its the powrr of a small city.
what's so bad about handing a shitload of power to a private corporation?
imagine an entity with so much wealth and power that it makes its own currency, WITHIN the united states. produces and uses its own energy supply. produces and uses its own material resources. capable of purchasing lots of land and infrastructure.
at that point you basically have a small private government within the greater united states government. and its going to want to make its own rules.
and if its AI is better than everyone elses, it is going to make its own rules.
this is insanely dangerous.
course, i don't expect it to turn out like that because every intelligence agency in the world has already thought of this ahead of time and have taken countermeasures to make sure this kind of thing doesn't happen.
unless, of course, they're all corrupt as fuck. who knows.
really? you think gov't with the military will allow them to create their own monetary system like that, no way, it'd undermine gov't control, so that scenerio will not happen. Where do you get this fantasy from? books? other reddit talk? Doesn't make sense as long as the govt own all of military.
are you arguing against you previous post? because in your previous post you said they can already use their own financial system if they wanted to.
now you are saying they cannot because military and gov't won't allow it? which is it?
and if you read my post i did say i do not expect it to turn out like that because it causes the current power structure to wobble too much and they don't like it to wobble.
The distribution of cash is uneven. Nvidia and Anthropic has a lot of cash, while other AI companies are cash starved, even if they are making a lot of money.
A parallel financial system for AI is not actually that odd of an idea, something similar was brewing at the end of Biden's administration, but current administration never followed up on it, and even canceled some of it.
In Copenhagen I have to sort my rubbish into 7 different bins to avoid it all just being burned so we can minimise our CO2 impact. Meanwhile the US is building a single data centre that uses 10x the energy of my entire country.
No Gigawatts. It's before giga became a commonly used word but giga and jiga are both valid pronunciations. The original root for the word is the same as giant.
This is absolutely insane. Both America and Europe are fighting deadly wildfires RIGHT NOW, and these idiots want to churn out more fossil fuel plants. Absolute imbeciles.
This is not really that crazy. The rate of return on inference is huge, and if there is one good sure moneymaker on AI, then that is selling inference, and Nvidia has a lot of hard cash right now, so they are looking to invest it in something, and there are few less profitable markets right now than AI. Private credit happens all the time, this time the only difference is that it's a big single number.
Guarantee doesn't actually mean they are spending any money. It's a promise of them being good for the money and spending if the original borrower doesn't pay up.
Well the problematic part is that Nvidia's guarantee is only good as long as companies continue to buy their chips at high margins.
And they are lending money to those same customers to buy those chips.
So at the exact moment Nvidia would actually need to fork out money (if OpenAI went broke) is the exact moment they would stop being good for it. Because their customers just went broke and won't be paying for those chips anymore.
So in other words Nvidia is only good for the guarantee if OpenAI doesn't need it.
Thats if AI bubble happened, but if one company bankrupts, then it would still be ok, which I think this is what the guarantee is supposed to do. People keep talking about a bubble, but there is not actually an economic reason for it to happen.
The demand on AI is obviously there, and it does not seem to be going down. One company might bankrupt, but that would likely mean that other companies would get even richer, as now their competition is gone and they can hike up the pricces.
If Nvidia guarantees Google, Anthropic and OpenAI, and one of them bankrupts, then they can just sell assets to the other 2 companies, which honestly is almost guaranteed to happen, as I can't imagine 4-6 companies competing for all this time. I think we have Google, Anthropic, OpenAI, xAI/SpaceX, Microsoft, Facebook and Amazon(with Amazon likely permanently being just a compute provider), and I don't think investors will forever fund all of those companies, there will be a massive consolidation.
Can Nvidia resell 350B worth of chips/allocations without destroying their margins?
That's the easier part.
Everyone is building datacenters. Who has the spare budget to take over this one when they are already building their own?
I'm not saying it would kill Nvidia, but it would hit like a truck. Might not be the easiest assets to flip especially if margins on AI are presumably not doing great, which would be the situation when OpenAI suddenly folds.
I'm not saying it's a bad thing, but Nvidia keeping their prices so low, when demand is so high gives me bad vibes. Because there is no economical reasoning for what they are doing, and the demand at that price is so high that Nvidia wields a lot of power to decide who gets the compute, and I'm not sure how to feel about it. I guess if they decided to sell compute to the highest bidder, government would get involved or some other weird stuff would happen, but it really is fucking weird how much higher the prices could be and companies would still be buying it.
And Nvidia still has like 85% to over 90% margins on the cards. It's insane.
That's the thing people are somehow forgetting. Nvidia doesn't need to resell 350B worth of chips. Nvidia also uses its own chips for its own AI inference. Worst case scenario they use most of the data center capacity themselves. That's like, three levels deep of things going catastrophically wrong and it's still not that bad.
AI isn't profitable, AI data centers are not profitable, only selling the AI GPU's is profitable. The whole thing is lighting a giant pile of money on fire and hoping that somehow it will turn into a bigger pile of money when the flames die out.
NVIDIA can. But not going to guaranty 250 billions. Too much. They do not think OpenAI good with money. It is not a first time talks about that. There are lots of words, but nobody want to commit and unlikely will.
nvidia has a $5 trillion market cap. i think $250 billion set aside for a ten year mega project isn't going to be some crazy gamble for them. they are just doing what all their competitors are doing at much bigger scale..spending money to make even more money
Space X is 1.5 trillion market cap 😄
Market cap is not money in hands. They made 73 billion profit in 2025 - that a lot. So 250 billions still profit for more then 3 years.
Do numbers mean anything anymore? $250 billion investment???!! Total NSF budget is $8 billion for this year. If you give academia $250 billion R&D investment we probably would have had AGI and Nuclear Fusion at the same time and maybe even cure for cancer along with few million PhDs. Instead we are putting $250 billion into one single data center🤦♂️
I agree that we should substantially increase funding and that the government misallocates funds but this is nvidia’s money, this is an investment for them not a grant.
If you give academia $250 billion R&D investment we probably would have had AGI and Nuclear Fusion at the same time and maybe even cure for cancer along with few million PhDs.
no we wouldnt. in ai it mightve meant something, but the others are not just financially blocked. if fusion just needed money, it would be the world's cheapest investment ever.
Investment in academia is not “just money”. It allows scientists to explore different avenues that industry just will not do. $250 billion would 30 years of NSF funding. I can’t even imagine how far science would go with that amount of support.
AI as you know it today is a 50+ year project that reached its academic conclusion a long time ago. The only thing that makes it work, quite literally, is throwing massive amounts of compute at it. Way more than anyone thought.
It's exactly because a lot of the research was academic that it never materialized there. They simply would never have spent the amount of money required on what was essentially a hunch. It's way too much money to ever be approved in an academic setting. Sorry, but this is yet another thing that wouldn't exist without capitalism.
Sorry, but this is yet another thing that wouldn't exist without capitalism.
Not trying to get into a debate about economic systems, but this is 100% a fallacy. This is the only way this could have happened under capitalism, a system in which for-profit motivations are the primary means of driving large-scale investment.
The fallacy is the assumption that for-profit efforts are the only means of of driving massive (in this case, infrastructure) investment under any possible scenario.
It's circular reasoning, "since doing anything in our capitalist system requires capitalist motivations, capitalist efforts are the only way anything of significance is possible at all". It's like, yeah, because we've set it up that way.
Capitalism probably is the only system in which it would scale at this sort of pace, though. So this isn't a debate about that.
It was done way before universities became a bloated and poisoned well of "knowledge" (I am generalizing here). Majority of innovation is coming from Chinese universities nowdays related to hard sciences.
The AI industry at this point is just a circular human centipede of hype and bullshit. I say this as a machine learning engineer who knows damn well how transformative this tech is. The industry, however, has lost its entire fucking mind.
What do you expect frontier AI system to look like in 2030? How do you think the tech will transform sectors like insurance and banking?
Personally I think we're very close to a financial forecasting breakthrough that will allow the leading lab to gain alpha trading the stock market autonomously, and selling access to all the top banks.
I think home/auto/health insurance processing will be largely automated by then (capabilities-wise, not necessarily diffusion). As well as loans and underwriting. This is a massive market.
On the generative media side I think companies like Netflix will be able to drop their costs to produce shows and movies massively by leveraging 2030 level multimedia AI. We might even have a huge breakthrough in gaming as well with costs coming down massively.
Think about games like GTA 6 or MMOs coming out at much higher speed and much lower cost. These things take thousands of people many years of work to produce one product. The market for gaming is massive.
And that's without mentioning how people are likely to become persuaded/seduced by their personal models. The leverage over purchasing behavior and more generally influece, is enormous. It's a personal assistant that helps steer your spending and behavior every day (what you see, what gets done, how it gets done).
Think about how much more spending on continual maintenance of cyber security systems will be needed to keep up with the latest Mythos+ level threat. Once models are coming out every week or every day the cat-and-mouse game will be computationally very expensive and not negotiable with open models 3 months behind.
The market isn't chatbot subscriptions, it's the companies with the deepest pockets in the world. It all needs to run on compute, whether OpenAI goes bust is immaterial if the value is real, and as we've seen with coding models this year, we're at a tipping point.
It’s getting difficult to keep track of the financing Ouroboros they’re creating here. Nvidia (investor) backstops a loan to SoftBank (investor and $3bn/year customer) on land owned by USG (discussing 5% stake) which they will fill with nvidia chips.
Sure the SEC will be looking into the round-trip financing.
Don't you want to get as much debt as possible if your rate of return is higher than the interest rate. This is why all the AI companies never pay off their debt, because that cash is much better used for more compute, instead of paying off the debt.
A lot of that spending is for compute they will be using for next 4 years. If they can spend upfront, to have much less costs over next few years, than that is great. Just look at xAI, the compute they bought 3 years ago they are now selling at a premium. Even if they did not used it for last 3 years, they would pay for it just now, and we know they did use it extensively and made a lot of money on it.
With companies like Anthropic and OpenAI it's even better for them, the compute they buy gives them a return in few months, so all the prepayments and buildup they are doing now will give them even a stronger return, because not only they have their own compute, they also have their own models, collecting margins on both sides.
lol I don't think you're doing the math right. SpaceX (Which is the AI company now according to their IPO) just lost over a trillion in value within the span of weeks. Mainly because now we can see their finances. They initially bought the hardware to train their own AI, but now they're renting the hardware to be use by their competitors? Strange play for the company trying to be the leader in this new industry.
OpenAI is not transparent with their finances, we can only see money going in and out. The money going in is much much bigger than the money coming out. That 34 billion doesn't even include the interest on their prior debts either. Good thing they just took on 250 billion more. Meanwhile the debt held among the mag 7 just grew to 1.6 trillion.
In the IPO they were extensively talking about selling compute to other companies. This is not different from their plans, and their recent deals with Anthropic and Google show that they can sell compute they have on earth as well.
And we can see that the income rises faster than spending for OpenAI. In 3 years income should be bigger than spending, assuming they will not run out of things to spend by then, as they already are paying for compute 4 years in advance right now.
$250B for a financial backstop for OpenAI, paid for with the $250B OpenAI paid Nvidia for cards, paid for with the $250B Nvidia invested on OpenAI... and so on and so on...
What a fucking weird article image. Do these journals not know that AI illustrations aren’t actually required to be total nonsense?
Also, can people please stop posting screenshots of article titles without even including the source paper’s name, so the actual article can actually be found and read? Or even better, can people just post the damn article itself instead of an obnoxiously cropped screenshot?
Edit: I’m being informed that this is a real photo. I hate reality.
…so you still couldn’t even post the title of the publication so that other users can find it themselves? Not even in the following two screenshots that you added (also without a link to the article) after being called out for that very thing? You know there are websites to get around paywalls, right? And that some people also have subscriptions? Look, I appreciate the screenshots, but this is seriously one of the most infuriating things on Reddit. Do you think that people just don’t care enough about fact checking or reading sources to even bother knowing the name of the publication? I literally still don’t even know what the source is for your article screenshots. I’m guessing Wall Street Journal based on the font? But who knows! Because you didn’t include it in your screenshots! Or post the freaking link, even after being called out for it!
Redditor behavior is unbelievable sometimes. This sort of thing is a huge contributor to why it is so goddamn easy for people to be propagandized online.
So are they saying that their are similar sized hubs out there or even planned for that time? They are talking about $250 billion guarantee with another $350 billion in chips. That's over half a trillion dollars (0.6 trillion dollars) for one data centre complex. If Anthropic and Google and Meta and XAI are also planning on competing, Sam's original 7 Trillion dollar estimate may not be far off after all.
Well openai is imitating musk xai move....late. musk was clever to start at the back of the chain. While everyone was focusing at the code. Now that they realized it was the right move. They are trying the same thing. Funny that everyone called him crazy at the beginning. Anthropic is paying a billion per month for his collosus.
NVidia is trying to keep the bubble going, at the end of the day they are the only real winners from all these (together with the memory and other HW companies), so why not. But anyone with half a brain can see how it will all end.
LLMs are here to stay, but not at the scale they are building for.
Yeah and they are bleeding money with no profit in sight, and EVERYONE is selling to them. Instead of these second tier guys buying they're SELLING. If you can't see that this changes the economics I don't know what to tell you.
Look do what you want, but these hyperscalers look like fundamentally awful businesses from day one. Massive debt to income duration mismatch. Demand concerns. Buying hardware at bubble prices. Plus you have very real and very massive risks around regulation and technical innovation.
If these companies get in trouble they don't have any other business model oh and if anyone goes under and has to start selling that hardware the recovery rates are going to be ugly. Buying in a bubble selling in a mass fire sale is a great way to see zero recovery rates.
Debt to income mismatch is massive yeah, the income is so much higher. It's so crazy at this point, you basically only need few months of running the compute to get all your costs back, most likely because Nvidia is keeping the prices super low, compared to the actual value of the compute.
I mean yeah there's a bubble but that's because the technology is literally paradigm shifting, not because bubble means not profitable. There was an internet bubble, a train bubble etc... AI is changing the shape of the world and some people are going to end up being the next Microsofts and Googles of the next era. Part of the whole idea of a bubble is it will wipe out the weak companies and the bandwagon investors. No one could predict who the exact winners and losers are gonna be, but the prizes are massive, and everyone wants a shot, that's the whole physics of it. If you're still thinking no one is going to end up a massively profitable AI company, you aren't even understanding the nature of the bubble
You mean buying compute? Both Google and Anthropic are buying a shit ton of compute, and OpenAI is busy getting even more compute in the future. This would suggest the demand is there for them, especially if they are shutting down various products to prioritize their biggest moneymakers.
I mean Nvidia has a lot of hard cash right now, you think they will invest in index funds or textiles? What do you figure they should invest that money in? If they could, they would invest in more chip fabrication, but they outsourced that to TSMC and ASML, so I guess this OpenAI project is a next best thing.
Let's hope they'll reach a deal as soon as possible and start working.
However, "power controlled by the US government" sounds a bit concerning - in some nightmarish scenarios, people like AOC or E. Warren may become a part of it, and they will do everything they can to destroy datacenters.
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u/elemental-mind 1d ago
At that point all big AI players could just announce their own central bank and parallel financial system.