alt Hacker NewsNvidia is the central bank of AI
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I've always found it interesting when corporations start acting like public institutions. When traditionally philosophical, social contract ideas apply to things like corporate governance. Or like here, where private structures get powerful and important enough to resemble government structures.
The ideas we deal with when we discuss society and organization aren't exclusive to government, they relate to human nature in general. I wonder if in the future we will have more discussion of power and how to organize it in corporations, similar to what we discuss today about government.
I wonder when they will give up on the gaming market because that could take down several publishers and developers. I really don't think it's an if question but a when because it almost feels like an afterthought at this point (they removed the standalone gaming revenue report from the financial reports this summer). Also I don't think AMD and Intel is capable "to step in" to replace them.
Interesting juxtaposition with Dario's/Anthropic's 'we must pace the frontier' missive today
If Nvidia is a bank, it's an Islamic Bank. They don't take interest (usury), they share profits and risk.
https://en.wikipedia.org/wiki/Islamic_banking_and_finance
Imagine a scenario where the AI bubble bursts and AI companies and neoclouds go bankrupt en masse, and then a huge rebound occurs when AI has a delayed takeoff. Nvidia ends up with a massive amount of compute on its hands from its backstop deals, and it also owns assets from failed companies when profits start to grow. New startups running using Hugging take the place of OpenAI and Anthropic when their compute assets are divided between survivors like Nvidia, Microsoft, Alphabet, Meta.
If/when there is an AI crash, any number of small startups can buy compute for the price of electricity without anyone wanting to buy them. That is when the real innovation happens. The top of the hype cycle is usually more about getting rich quick and buying and shutting down competition.
Market correction will happen. Banks go down and close during recessions. Hope these people are wise enough to see through these effects.
This is a good headline and point.
Realistically, they're worse than a central bank, because they can't exactly expand supply monotonically like a normal central bank. Nor do they realistically control rates.
The Japanese economy and yen carry trade is a close second.Rising oul prices and reduced output due to the conflicts in the Middle East could filter through to increasing yields on Japanese debt. In turn, the yen interventions have to continue to keep it lower than 160, which seems to be the psychological barrier for the yen carry trade.
Okay, but at some point these investments need to start turning profits; the financing NVDA has arranged is temporary, and private credit needs returns at some point. The overinvestment in AI will lead to a downturn in the capital cycle.
Paywall?
How many top signals like this article do you need to see before you exit the market?
Let’s look to the past:
https://www.history.com/articles/1929-stock-market-crash-war...
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hardware? yes Nvidia is software? Google is. AI = Data Data = Google
> worth around $5.4trn
Note that the Fed has a $6.7tn balance sheet [1]. (This is a silly comparison. But still fun.)
The real comparison: Nvidia's $500+ billion of investments and commitments [2] is substantially more than any easing the Fed has done in the same time [3]. Monetarily, Nvidia is creating a lot of money in our economy.
The good news: I have seen no evidence Nvidia has borrowed against its stock or otherwise linked its equity value to these commitments. Its stock could crash without causing–as long as its cash flows continue–a credit crisis through its investments and commitments.
[1] https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
[2] https://www.sec.gov/Archives/edgar/data/1045810/000104581026...
[3] https://www.federalreserve.gov/monetarypolicy/bst_recenttren...