Is it a Ponzi scheme? Not strictly, but is interesting to see a company investing in their customers. There’s nothing wrong with doing so, but it’s interesting to see it at a time when demand is so high it can’t be sated.

Of course, this doesn't make it a Ponzi scheme, it would at best be a different type of fraud. And it ignores the fact that the money isn't moving so directly - the AI companies are typically buying GPU compute power from a cloud provider, and it is the cloud provider paying Nvidia.

Still, if you're investing in Nvidia, you should keep an eye on this. It may mean that some of the increased demand for Nvidia GPUs is artificially sustained by Nvidia itself.

So nvidia gets to do this:

1) start with $100 M

2) invest in startup

3) get investment worth at least $120 M (investment at discount)

4) reflect 20% gain on books

5) receive $80 M in guaranteed revenue (H100s)

So before the inevitable long-term failure of 90% of these startups, nvidia gets to reflect a nearly immediate 100% gain on any money they run through this.

Then they use the gain to invest in more startups where the only thing guaranteed is the purchase of nvidia chips.

When the startups go to zero and the market is flooded with used H100s they probably believe they will release a new arch and repeat.