alt Hacker NewsOr, hear me out, maybe there's a compute shortage and xAI has compute and manages that well.
There are no dark GPUs. Compute translates directly to money for these frontier labs.
I think everyone is reading way too much into this. Sure there is some circular transactions that are sus, but this ain't it.
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> I think everyone is reading way too much into this. Sure there is some circular transactions that are sus, but this ain't it.
Let us pin this comment and see how it ages
>There are no dark GPUs
This might not be true. Someone was comparing Nvidia's production rate with known data center capacity, and they do not match. Their conclusion was that people (possibly even Nvidia) were hoarding GPUs- in the very short term this might be a good strategy, but GPUs go EOL fast. There are other stories about paused datacenter builds that match with this.
TSMC is definitely fully allocated, based on current 40 wk lead times for FPGAs..
Indeed, that hardware was bought on old RAM, SSD, etc pricing. These are now 5x the price.
To reap massive profits before depreciation is just plain smart. LLM space, model generation is just plain crowded now too. And everyone thinks a crash is coming.
They could also build out their own end-user infra, but letting someone else which already sells direct to the public do so, is sensible.
I know of the desire to show profit for the IPO, but my point is, this is a good move on its own.
xAI lets companies like Google move fast and hurt people at arms length.
Google itself has a good reputation as a facilities operator. SpaceXAI is operating gas turbines emitting exhaust at ground level.
Compute is presently in shortage but generally it's a commodity. It also depreciates.
There is a compute shortage.
In fact, for all these companies to do what they're going to do, they need a massive, massive massive amount of data centers, a highly improbable number of data centers that need to be built in an highly improbably short amount of time.
And the capitals about to dry off in about a year. So it's a race between these improbable timelines on data center construction, with capital evaporating.
> I think everyone is reading way too much into this. Sure there is some circular transactions that are sus, but this ain't it.
Alphabet/Google profits:
Q1 2025: $34.54 billion
Q2 2025: $28.20 billion
Q3 2025: $34.98 billion
Q4 2025: $34.46 billion
<<Q1 2026: $62.58 billion>>
Amazon profits:
Q1 2025: $17.1 billion
Q2 2025: $18.16 billion
Q3 2025: $21.2 billion
Q4 2025: $21.19 billion
<<Q1 2026: $30.3 billion>>
Both Alphabet/Google and Amazon have invested recently into Anthropic and are doing all sorts of financial chicanery.
https://www.youtube.com/watch?v=-bjNrGFiAI4
Nah, man, it's all fine, they're just going to take down the entire global financial system doing this crap, and by global, I mean <<everyone's>> pensions are going to take a hit, even "fully funded" pension systems.
Compute is also a rapidly depreciating asset.
I want to make a comparison with a car rental business and say that it would be like valuing Hertz entirely on the basis of the number of cars they own, as opposed to how many they rent out, but cars have a much longer depreciation period, if there are no customers they’re not costing you more money, unlike your computer which you are using for training and sucking up massive amounts of energy, and those cars do maintain decent value even after they’re of little use to the car rental company, unlike the compute here.