'Circular' AI Mega-Deals by AI and Hardware Giants are Raising Eyebrows (sfgate.com) 46
"Nvidia is investing billions in and selling chips to OpenAI, which is also buying chips from and earning stock in AMD," writes SFGate. "AMD sells processors to Oracle, which is building data centers with OpenAI — which also gets data center work from CoreWeave. And that company is partially owned by, yes, Nvidia.
"Taken together, it's a doozy." There are other collaborations and rivalries and many other factors at play, but OpenAI is the many-tentacled octopus in the middle, spinning its achievement of ChatGPT into a blitz of speculative investments. "We are in a phase of the build-out where the entire industry's got to come together and everybody's going to do super well," OpenAI CEO Sam Altman told the Wall Street Journal on Monday. "You'll see this on chips. You'll see this on data centers. You'll see this lower down the supply chain...."
Some worry that the more closely companies intertwine, the more susceptible they are to creating a bubble, or a market not actually supported by real consumer demand. "You don't have to be a skeptic about AI technology's promise in general to see this announcement as a troubling signal about how self-referential the entire space has become," Bespoke Investment Group wrote in a note to clients, per CNBC. "If NVDA has to provide the capital that becomes its revenues in order to maintain growth, the whole ecosystem may be unsustainable..."
Also, even with Nvidia's investment, AMD's shares and OpenAI's repeated fundraises, the ChatGPT-maker doesn't have the cash to meet all of these vast commitments. And if OpenAI's soaring projections about demand for AI computing don't bear out, there will be a lot of committed money — and a large share of the stock market — that would see its foundations topple.
Thanks to long-time Slashdot reader mspohr for sharing the news.
"Taken together, it's a doozy." There are other collaborations and rivalries and many other factors at play, but OpenAI is the many-tentacled octopus in the middle, spinning its achievement of ChatGPT into a blitz of speculative investments. "We are in a phase of the build-out where the entire industry's got to come together and everybody's going to do super well," OpenAI CEO Sam Altman told the Wall Street Journal on Monday. "You'll see this on chips. You'll see this on data centers. You'll see this lower down the supply chain...."
Some worry that the more closely companies intertwine, the more susceptible they are to creating a bubble, or a market not actually supported by real consumer demand. "You don't have to be a skeptic about AI technology's promise in general to see this announcement as a troubling signal about how self-referential the entire space has become," Bespoke Investment Group wrote in a note to clients, per CNBC. "If NVDA has to provide the capital that becomes its revenues in order to maintain growth, the whole ecosystem may be unsustainable..."
Also, even with Nvidia's investment, AMD's shares and OpenAI's repeated fundraises, the ChatGPT-maker doesn't have the cash to meet all of these vast commitments. And if OpenAI's soaring projections about demand for AI computing don't bear out, there will be a lot of committed money — and a large share of the stock market — that would see its foundations topple.
Thanks to long-time Slashdot reader mspohr for sharing the news.
Blowing up the Bubble! (Score:5, Insightful)
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Post-AI hype, what is it going to be? (Score:3)
1979-1985 it was housing and real-estate
1986-1989 it was corporate mergers and raiding the bought out companies pension funds
1990-1993 it was large scale recession
1995-2000 1/2 it was the internet
2001 - 2008 it was housing bubble, no documentation loans, 100% secrutiizing no doc and low doc morgage loans to shift the risk
2009 - 20015 it was sideways
2016 - 2020 it was blockchain
2021 - 2025+ it is LLM and AI, rebuilding the electric grid, natural gas pipelines and having the home owners and apartment renters
Besides AI, what is your leadership/product idea? (Score:2)
"What is your new product idea which does not use AI and when is it coming to market?" is what we need to ask the non-aI companies since all we hear in the headlines and company financial calls is "AI allowed us to transform (buzzword, buzzword, buzzword) and do (buzzword buzzword) number (buzzword)."
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Don't forget all the monopolies that are happening right now. Useful tech? Gone in the bowels of some capital group.
When this merry go round grinds to a halt, it isn't going to be good. Whomever is President is going to have to do some decisions on the level of FDR, and pick the country up with civilian corps or work programs, or just watch the country collapse, and cause World War 3, as all the other nations go to try to get their chunks of land from the US's carcass as soon as the military is gone.
The
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Which blockchain bubble? Nobody sane invested into that anyway. A few people trying a pump and dump scheme got lost when others dumped first, but that's it. I can't understand why people always try to compare things to NFTs, where everyone knew from the start that it's attaching a price tag to something that has no worth itself. At least NFT were honest. Bitcoin claims to provide a good currency while it is hard to pay with it. NFTs always said you only speculate with them.
Re: foundations don't topple (Score:2)
What language is this?
Re: foundations don't topple (Score:2)
Slop
Investing not vendor financing (Score:2, Interesting)
Re: Investing not vendor financing (Score:2)
AGI has nothing to do with the current technology that OpenAI is selling. At this point, it is just a nebulous idea. Right now, AGI is just like what cold fusion was twenty years ago. If you had invested like crazy in nuclear fusion companies because you had high expectations for them figuring out cold fusion, you would have lost a lot as fusion is still just a research toy that in no way functions as a profitable business model. As it stands, we do not know whether the existing technology OpenAI sells will
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The transformer property is neither relevant to, nor incompatible with, the Markov property.
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I work at one of the big companies involved in this situation. All I know is, we cannot deploy solutions fast enough for the number of customers we have much less the rate at which demand is growing.
Many are startups and many are big companies still doing pilot projects. It all could go away. But it is not just VC dollars and George Forman AI Grills; at least for the Fortune500 types, there is an awful lot of actual busine
Re: Investing not vendor financing (Score:1)
Re: Investing not vendor financing (Score:2)
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It is about control and incentives. Even when it is circular, everyone is reinforcing a certain thing that next company should do.
There's nothing left (Score:5, Interesting)
Hmm... (Score:2)
'Circular' AI Mega-Deals by AI and Hardware Giants are Raising Eyebrows
Given who owns/runs these companies, I'm thinking "Jerks in a circle" -- but... it seems a bit wordy. :-)
Consumer demand? (Score:3)
Some worry that the more closely companies intertwine, the more susceptible they are to creating a bubble, or a market not actually supported by real consumer demand
Do investors count as consumers? All I see is Doctorow's trend of enshitification, justifying the removal as many employees as possible until real consumers are paying real money and getting self-service in return.
Nvidia vs. AMD, bloodbath (Score:5, Interesting)
"If NVDA has to provide the capital that becomes its revenues in order to maintain growth, the whole ecosystem may be unsustainable"
Lucent did this in the late 90s, covering up their ruse with clever accounting that wasn't so clever when it was discovered. This tanked the company and the stock. However, what Lucent did is more like AMD's recent deal rather than what Nvidia's deal with OpenAI. Neither Lucent nor AMD did quid pro quo deals but rather a large outright gift to the customer just so they could technically record a large sale. Nvidia's deals are also geared towards pushing sales. However, instead of giving away NVDA shares, they are receiving OpenAI shares, more like a quid pro quo.
"We are in a phase of the build-out where the entire industry's got to come together and everybody's going to do super well," OpenAI CEO Sam Altman told the Wall Street Journal on Monday.
This makes no sense. There is no emerging market where "everybody's going to do super well." That's always a lie. There will be a bloodbath, which has been true of every single emerging market ever. Most players today will fail. Only a few will eventually remain, and they will be the only ones that will do "super well."
OpenAI is way behind its main competitors (the hyperscalars) because it loses money and has no cash flow cow. OpenAI is likely one of the ones that will fail unless there is a significant paradigm change.
Remember marchFIRST? (Score:4, Interesting)
Those of us who were around for the web 1.0 boom should remember marchFIRST. It was the dotcom enabler with its own VC arm. marchFIRST would get investors to give it money that it invested in startups. Then the startups would use the money to pay marchFIRST for branding services. And web design services. Then backend development. Followed by hosting. Then marchFIRST started over with another bullshit startup. And everybody at marchFIRST was getting bonkers salaries, free lunches, and playing pool at the office with the money skimmed off at each step of the chain. AI companies are doing an even more obvious scam with much more money. The American AI companies, hardware providers, data center companies, etc. are all just bouncing money and phony spending commitments around so they can keep getting paid until the whole house of cards comes tumbling down.
Re: Remember marchFIRST? (Score:2)
Some might survive but it's hard to see all of these companies doing well enough to justify their investments. They are all selling essentially the same thing so they have to compete and revenues will suffer.
That's cool. Whatever. (Score:2)
I long ago gave up trying to understand crypto. And If I just don't understand something, I don't invest in it. So this is all just mildly interesting noise.
"Markets can remain irrational longer than you can remain solvent." - Keynes
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Re:That's cool. Whatever. (Score:4, Insightful)
Flowery nice words flowing from the talking points of others. who just ignore the litany of coin failures, fraud, scams on astoundingly large scales, and outright facilitation of reprehensible trade. A country that talks about turning to crypto has nothing left in options, and it won't help them.
The day that currencies are routinely valued in reference to Bitcoin, you have my attention. But that day will never come. Never? I'm saying never.
I'm very in tune with the technology and the ostensible "healthy" points of these vehicles. I don't understand them as an investment vehicle, so I don't invest in them. I'm not an ideologue. Investment is not philosophy. If you want to back it to throw off the shackles of what you perceive to be a doomed system, go for it. Have fun.
And being a doomsayer is nothing new. Get in line behind all the people who have been predicting the fall of the global financial order since the 1800s. Someday one of them will be right, but you'd be a fool to hold your breath. 10 years from now, I'll be buying my groceries in my local currency, carefully invested and grown.
Re: That's cool. Whatever. (Score:2)
Or quipu, or wampum, or silver, or...
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bitcoin is the first tool in human history that lets you own value directly without permission without intermediaries without banks bleeding you dry through inflation and debt.
Crypto "money" is just another form of promise. While I agree it might be useful in a global financial crash, I'm skeptical. For it to have "worth", a huge amount of expensive global infrastructure has to keep humming along. If fiat currency fails, I fear for the reliability and availability of the Internet - and all that essential stuff reachable by way of it.
But more to the point, you seem to be disregarding precious metals. Have you noticed what has been going on recently with gold and silver? A
Ack! Damn. Wrong article. Off topic. (Score:2)
This was meant as a reply to the article about bitcoin correction.
So sorry,
Re: That's cool. Whatever. (Score:2)
If you can understand wampum as money and basic cruptography, you should be able to understand cryptocurrency.
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I don't understand it as an investment. Guess I should've been more specific. I went with brevity thinking the context would suffice.
2008 (Score:2)
Anyone else think this sounds suspiciously like the derivatives markets that crashed the global economy in 2008?
It's all made-up value and when the first domino falls the rest fall HARD.
"But they're blowing 4D bubbles!" (Score:3)
"And we can't lose the AI advantage to Chyyyyynaaa! We'll only need to build 40 nuclear reactors far too quickly. Let's just get rid of all these unnecessary safety and zoning regulations."
Meanwhile:
A rehash of the 2008 Subprime bubble (Score:2)
Anyone old enough to have witnessed the Subprime bubble in 2008 would see nothing new here. This is just like subprime mortgage CDS that got sold to everyone before 2008, it is a Ponzi scheme trying to get as many people on board as possible to keep it going as long as possible before it inevitably bursts.
The farther this poison spreads, the larger the crater would be when it bursts.
It is time to pull out of the US stock market, find somewhere safe to hunker down a few years so you won't be caught in the b
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It does look similar. The thing I don't quite get though, is that bond yields are still very good, so if you thought this thing was going to blow, then you'd run to bonds. Once everyone else starts panicking, bond yields will crater and anyone holding them is going to make huge gains. If the wider economic contagion from this is big enough, it's likely that they will restart QE and that will boost bond prices even further.
Even other 'safe' assets like real estate, haven't really come down in price enough to
We are witnessing the building of a house of cards (Score:2)
nonsense (Score:2)
Some worry that the more closely companies intertwine, the more susceptible they are to creating a bubble
This is nonsense, they cannot create a bubble now, because they have already created a bubble. "Some" need to catch up with where we were months to years ago. At least it's safe to predict that something which is already happening will happen... yeah, we know, we can see it.
Interlocking corporate structures (Score:3)
They love this in Korea (Samsung is king).
It usually is done to allow people to sell off shares without losing control of a company.
The problem is once you do that, you are kind of stuck. If one company starts to lose money, it can cause major problems. It becomes very hard to raise new capital - both for the companies involved and for the people that started it.
The Samsung heirs now have a huge problem raising the inheritance tax. If they sell anything, they are likely to lose control of Samsung because of how convulated they made the circle of ownership. They are trying to do it via loans, but 11 billion is a lot to owe - particularly if the bank takes any voting control they lose the company.
Similarly the AI network of ownership could very well end up taking down EVERY single one of the companies involved if AI does not turn out to be the godsend people are convincing themselves it is.