Nvidia invested $2b into CoreWeave for 9% equity stake. CoreWeave is spending $35b in CapEx in 2026. Therefore, Nvidia's investment is only 5.7% of CoreWeave's single year CapEx. The other $32b is coming from other sources that isn't Nvidia. This is hardly circular.
Nvidia invests in Neoclouds because it's a hedge against hyperscalers having too much power, ie designing and prioritizing their own chips, and not fully using Nvidia's rack design. Neoclouds give hyperscalers competition. Neoclouds accept Nvidia investments because it allows them to secure Nvidia chips first, which is a competitive advantage since new Nvidia chips have been as much as ~5-20x more efficient than old Nvidia chips.
Nvidia was planning to directly compete against hyperscalers through DGX Cloud. They cancelled public DGX Cloud access when they found that investing in Neoclouds would accomplish the same goals without having to compete against their biggest customers.
If you're Nvidia, it's smart because Neoclouds that you have a large stake in will deploy your full stack from GPUs to networking to storage racks. They will share valuable usage data back to you so you can design a better next generation. Hyperscalers are likely a lot less cooperative, prefer to use their own designs if possible, and will guard their usage data.
"Furthermore, in the case of CoreWeave, Nvidia has also provided a significant financial backstop against unsold GPU capacity. Under the agreement with an initial value of $6.3 billion, “in instances where [CoreWeave’s] datacenter capacity is not fully utilized by its own customers, NVIDIA is obligated to purchase the residual unsold capacity through April 13, 2032.” In other words, Nvidia is committed to purchasing unsold GPU capacity if CoreWeave is unable to find another buyer. With an initial value of $6.3 billion, there is the potential that the arrangement could become larger over time."
I don't know how Nvidia is handling Coreweave GPU sales revenue in their accounting, but it sounds to me like it should have a pretty big asterisk attached to it. It's more like a consignment arrangement than an actual sale. And it obviously creates a huge incentive for Coreweave to over-order GPUs, since there's no risk (I doubt they're paying cash up front).
- you fund a new company and sign long terms contracts with it - this new company uses the money you gave it and a lot of debt (backed by long term contracts) to build datacenters and buy a lot of GPU - your figures look great
What happens when they run out of debt or funds? If they reach some kind of profitability it's not a big deal, but if not ...
EDIT
Forget to mention the buyback of unused capacity problem: what happens to your figures when you have to buy back tons of unused GPUs?
It being that size, lasting for that long, and the total lack of viable products created by it are the problem. Financing only adds leverage, that makes every loss or profit larger.
But "invest in companies that may grow your own TAM" is an ancient strategy. Sometimes it works, sometimes it doesn't (like any strategy).
I'm not disagreeing with you, just saying it's business as usual.
What is the end of this sentence?
With just these 2 comments, now I'm really gonna read that article.
The only profitable company is the one running the scam.
Depends if they actually got the $2b in real money. There's a difference.
It's a big deal if no money was involved. Nothing even entered the company directly. Some deals have structured with Special Purpose Vehicles where money goes to the SPV. The SPV buys GPUs with it (from Nvidia). GPUs is loaned back to the company involved. So this company is stuck with this GPU rental, which may or may not be what they want and not $2b.
This sounds like a bad deal? So Nvidia had to sweeten the deal and promise min utilization on those GPUs by renting it themselves even if they don't need it.
So what's income and what's expense here?
That's the problem. It's inflated and messed up.
https://investors.coreweave.com/news/news-details/2026/NVIDI...
One aspect of the profitability might be the utilization and the pricing a few years down the line for slightly older hardware. Already now it seems like the increased processing you get from newer devices versus the cost difference makes something like an H100 or even A100 significantly less desirable than newer more powerful ones. As an individual, I am happy to be able to get an H200 on demand, but the B200 or B300 can do so much more work with optimized software and models for only modestly more cost that if those become available then from a business perspective you really have to prefer that if you can keep it occupied.
Then with Vera Rubin being like 3 times more effective or whatever, that adds a new layer of gradual obsolescence. So the question is can they keep the pricing up on the older ones a few years down the line enough to fill out the end of those expected payback periods.
The real boogeyman for a neocloud that has heavily invested in expensive Nvidia hardware might be a variation of that beyond Nvidia with startups that have even more dramatic efficiency increases pushing the leading edge even further. For example, if companies like Mythic AI and d-Matrix could somehow rapidly rapidly scale, that would push prices down for all of Nvidia hardware that is significantly less efficient.
I guess so far it doesn't look like any startups with really big efficiency breakthroughs are even close to being able to scale like Nvidia though, especially with the manufacturing and power crunch. But I suspect some of that is because of favoritism and strong arming protecting investments rather than a free and fair ecosystem.
think about stuff like pork barrel funding for aerospace, which props up jobs, which generates funding for political campaigns that perpetuate pork barrel funding.
That puts a cap on surplus (potentially unused?) datacenter capacity that's around by the time the AI bubble pops.
It is. The GPUs go on to be used to get loans to then get more GPUs.
https://www.currentmarketvaluation.com/models/s&p500-mean-re...
You may be right about WW3 in 2030, but based on the track record it's more likely that Russia will be the invader.
Plausible.
> ... as that is when many globalist think tanks declare they will invade Russia to take their resources, and it's unlikely even China can ignore that, and here comes World War III.
Complete nonsense, for several reasons.
1. Are you saying that think tanks are saying now that they will invade Russia? If so, I want to see your sources. Or are you saying that you are confident now that think tanks will later say to invade Russia in 2030? If so, I want to see your logic.
2. "Think tanks declare they will invade Russia". Think tanks don't invade anybody, because they don't have armies. Think tanks can say whatever they want; they have to get someone with actual armies to agree.
3. Nobody with an army wants to invade Russia, resources or no. Russia is a terrible place to invade. It's too big, too far, too much strategic depth.
4. Current Russian military doctrine says that an invasion that is succeeding will be grounds for using their nukes. That probably won't mean just tactical nukes. If the military or the think tanks want any part of that, they're incompetent.
5. The resources are more in Siberia than in European Russia. The most likely successful invader would be China (if they're willing to run the risk of the nukes). If the globalist think tanks think that they are going to benefit, they aren't thinking.
Nobody lives in GPUs and what was the ratio of equity/debt for the toxic assets in 2007?
Financing is circular because creating a liability for one party (debt) creates an asset for another (the bank) off of which more debt can be secured
A bank / financier sells trust and reassurance. They otherwise invent most money from thin air.
It may be fine, or not. It it has been a frequent type of manipulation to obfuscate the real accounting situation.