Nvidia says every $1 it invests returns $100, but the stock keeps falling
Nvidia dismisses "circular financing", says every $1 it invests brings back $100
Jensen Huang defended Nvidia's AI investments at Goldman Sachs' Communacopia + Technology Conference, insisting they are not circular financing: 'I put in one, and a hundred comes back.' Nvidia has invested about $50 billion in AI labs and guaranteed up to $105 billion for OpenAI's Ohio data center, where it is the exclusive chip supplier. Yet NVDA fell 2.37% to $218.36, its third straight decline, as investors question whether AI demand is truly independent.
It's not circular because we put a little bit of money in, and a lot of money comes back.
- silverFork
A la Enron but completely legal. It is not just a circle, it is more like a swirl. Wallstreet invested in Ai Farms to purchase NVDA chips and then NVDA invested in Ai Farms and not only that it is investing in its customer, Anthropic and its IPO.. They are recycling the cash that they harvest from stock markets till it becomes the famous singularity in funding like a financial hurricane.
- iammjm
Where are those 99$ coming from? Who is actually paying this money? Because it seems like so far everybody is losing money with no reversal of this trend in sight
- vardump
I first read that "every $1T brings back $100", thinking, wow, is it THAT bad?
No, it's very unlikely at this point every $1 Nvidia invests brings back $100. Stating something like that is almost a red flag that things are overheating.
- bhouston
It is a bit circular but it also a growing real market. NVIDIA is accelerating the market and also making money. It is a smart strategy on their part.
We are not at the top of this trend yet so I do not see this as over investment.
I remember the criticism Microsoft got for investing in Facebook/Meta that gave them a whooping $15B valuation and getting 1.7% in 2007. Not all deals will turn out that prescient but a few will and make up for any duds. This is a real market.
- blitzar
I don't know about $100 back ... but their profit margin is $0.90 on the gpu that is bought with the $1 they lend / swap for equity + they get ongoing interest / equity stake.
Its a mighty fine deal for Nvidia
- Ekaros
So if they just had spare 100 billion they could make 10 trillion? Sounds reasonable and plausible right? Sadly market manipulation is not being prosecuted.
- sottol
Anything that puts pressures on Nvidia's margins is going to have an outsized effect imo - margins declining from 75% to ~50% would undo all of its projected 2027 growth of 70%.
And what about the purported "AI frontier slowdown" - if frontier labs stop pushing better and better models, the main way to grow the pie is more users and that will eventually stop, too. Then providers would probably stop buying new hardware hand-over-fist and move to a slower depreciation-based replacement.
- nicman23
are those 100$ in the room with us right now