Comment by roughly | Hacker News Reader

Comment by roughly | Hacker News Reader

Parent Full thread

> Their measured performance on things people care about keep going up, and their software stack keeps getting better and unlocking more performance on existing hardware

I'm more concerned about fully-loaded dollars per token - including datacenter and power costs - rather than "does the chip go faster." If Nvidia couldn't make the chip go faster, there wouldn't be any debate, the question right now is "what is the cost of those improvements." I don't have the answer to that number, but the numbers going around for the costs of new datacenters doesn't give me a lot of optimism.

> Is that based just on the HN "it is lots of money so it can't possibly make sense" wisdom?

OpenAI has $1.15T in spend commitments over the next 10 years: https://tomtunguz.com/openai-hardware-spending-2025-2035/

As far as revenue, the released numbers from nearly anyone in this space are questionable - they're not public companies, we don't actually get to see inside the box. Torture the numbers right and they'll tell you anything you want to hear. What we _do_ get to see is, eg, Anthropic raising billions of dollars every ~3 months or so over the course of 2025. Maybe they're just that ambitious, but that's the kind of thing that makes me nervous.

GPUs are supply constrained and price isn't declining that fast so why do you expect the token price price to decrease. I think the supply issue will resolve in 1-2 years as now they have good prediction of how fast the market would grow.

Nvidia is literally selling GPUs with 90% profit margin and still everything is out of stock, which is unheard of before.

> OpenAI has $1.15T in spend commitments over the next 10 years

Yes, but those aren't contracted commitments, and we know some of them are equity swaps. For example "Microsoft ($250B Azure commitment)" from the footnote is an unknown amount of actual cash.

And I think it's fair to point out the other information in your link "OpenAI projects a 48% gross profit margin in 2025, improving to 70% by 2029."

> "OpenAI projects a 48% gross profit margin in 2025, improving to 70% by 2029."

OpenAI can project whatever they want, they're not public.

They still have shareholders who can sue for misinformation.

Private companies do have a license to lie to their shareholders.

> Yes, but those aren't contracted commitments, and we know some of them are equity swaps.

It's worse than not contracted. Nvidia said in their earnings call that their OpenAI commitment was "maybe".

Sounds like the railway boom.. I mean bond scam's

The fact that there's an incestual circle between OpenAI, Microsoft, NVidia, AMD, etc.. where they provide massive promises to each other for future business is nothing short of hilarious.

The economics of the entire setup are laughable and it's obvious that it's a massive bubble. The profit that'd need to be delivered to justify the current valuations is far beyond what is actually realistic.

What moat does OpenAI have? I'd argue basically none. They make extremely lofty forecasts and project an image of crazy growth opportunities, but is that going to ever survive the bubble popping?

I still don't really understand this "circle" issue. If I fix your bathroom and in return you make me a new table, is that an incestuous circle? Haven't we both just exchanged value?

The circle allows you to put an arbitrary "price" on those services. You could say that the bathroom and table are $100 each, so your combined work was $200. Or you could claim that each of you did $1M work. Without actual money flowing in/out of your circle, your claims aren't tethered to reality.

You don’t think real money is changing hands when Microsoft buys Nvidia GPUs?

It's a soft version of money printing basically. These firms are clearly inflating each other's valuations by making huge promises of future business to each other. Naively, one would look at the headlines and draw the conclusion that much more money is going to flow into AI in the near future.

Of course, a rational investor looks at this and discounts the fact that most of those promises are predicated on insane growth that has no grounding in reality.

However, there are plenty of greedy or irrational investors, whose recklessness will affect everyone, not just them.

For Nvidia shares: converting cash into shares in a speculative business while guaranteeing increasing demand for your product is a pretty good idea, and probably doesn't have any downsides.

For the AI company being bought: I wouldn't trust these shares or valuations, because the money invested is going on GPUs and back to Nvidia.

What about when Nvidia sells GPUs to a client and then buys 10% of their shares?

Their shares will be based on the client's valuation, which in public markets is externally priced. If not in public markets it is murkier, but will be grounded in some sort of reality so Nvidia gets the right amount of the company.

My point was that's an indirect subsidy. NVIDIA is selling at a discount to prop up their clients.

Reply on news.ycombinator.com