"Nvidia is, in crucial ways, nothing like Enron the Houston energy giant that imploded through multibillion-dollar accounting fraud in 2001. Nor is it similar to companies such as Lucent or Worldcom that folded during the dotcom bubble. But the fact that it needs to reiterate this to its investors is less than ideal. Now worth more than $4tn (3tn), Nvidia makes the specialised technology that powers the world's AI surge: silicon chips and software packages that train and host systems such as ChatGPT."
"This year has been an exceptional one for the company: it has struck at least $125bn in deals, ranging from a $5bn investment into Intel to facilitate its access to the PC market to $100bn invested in OpenAI, the startup behind ChatGPT. But even as those deals have fuelled surging stock prices and paved the way for chief executive Jensen Huang's energetic world tour,"
"The start of these concerns has been the circular nature of many of its deals. These arrangements resemble vendor financing: Nvidia lending money to customers so they can buy its products. The largest of these is its deal with OpenAI, which involves Nvidia investing $10bn into the company each year for the next 10 years most of which will go to buying Nvidia's chips. Another is its arrangement with CoreWeave, a company that provides on-demand computing capacity to big AI firms,"
Nvidia is worth over $4tn and produces specialised silicon chips and software that power AI systems such as ChatGPT, supplying datacentres worldwide. The company completed at least $125bn in deals this year, including a $5bn investment into Intel and roughly $100bn directed toward OpenAI. Several agreements resemble vendor-financing, with Nvidia investing in or leasing its own hardware to customers, most prominently a ten-year, $10bn-per-year pact with OpenAI and an arrangement with CoreWeave. Those circular arrangements have raised doubts and comparisons to past corporate collapses, prompting rebuttals that Nvidia does not rely on vendor financing to grow revenue.
Read at www.theguardian.com
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