So, Nvidia are backstopping $100B for the Ohio project, yet at the same time OpenAI are developing their Jalapeño processor, which will mean it will no longer need Nvidia GPUs for inference. That does not really make any sense to me.
If you can see the future, by all means invest in the one stock that will go up the most. If you can't see the future, diversifying into assets that have negative correlation (one goes up if the other goes down) lowers volatility at the cost of limiting possible upside.
Nvidia has a massive pile of money. Where should they invest? If they believe in what OpenAI is doing, investing in it makes sense no matter what hardware OpenAI chooses. If OpenAI manages to make something much better than Nvidia hardware, Nvidia's sales will go down as the value of OpenAI goes (way) up. If OpenAI fails to make something as good as Nvidia hardware, they buy Nvidia hardware.
It is odd how internet commentators seem to think that companies make investment decisions as a way to root for a team. They do not. That is not how finance professionals think!
That is an option. It is usually not the best option.
Dividends are taxed. You are forcing shareholders to pay a good chunk of money in taxes.
Suppose Nvidia decides not to hedge the risk that competing products eat into their margins. Some years they get lucky and are flush with revenue. Other years they have much lower revenue.
Even in bad years, they want to keep paying to make future products. Cutting employee pay or mass firings would break their engineering org. To avoid that, they would need enough cash on hand to survive several bad years. Now they can't pay dividends because they need this extra buffer of cash! Hedging is a better deal for everyone.
> The shareholders are free to invest in competing businesses.
OpenAI is not (yet) public. Most Nvidia shareholders can't choose to hedge risk by buying shares in OpenAI, or any similar company (they are all private or a small part of a bigger public business).
https://www.forbes.com/sites/iainmartin/2024/08/06/how-victo...
Data centers are being built on his land in New Albany:
https://www.wsj.com/tech/ohio-intel-chipmaking-investment-st...
So either Nvidia is dangling a carrot in front of the Epstein people in the Trump admin (Trump, Lutnick, etc.) or it is in on it. I wonder where Wexner got the CoreWeave tip.
"Nvidia is running on borrowed time" - https://youtu.be/k44OmbYqLzk