Of mice and pumpkins
+A year ago, Nvidia announced it would invest up to $100 billion in OpenAI. By January, “up to” had deflated to $30 billion. Now, a plan for Nvidia to backstop OpenAI’s Ohio data center with a $250 billion guarantee has been whittled down to a $120 billion guarantee.
As the company making the most profit from the AI buildout, Nvidia also has the most to gain from keeping it going. Seeding neoclouds and AI labs with cash and guarantees, it’s allowed those companies to secure the funding they need to build data centers and equip them with Nvidia GPUs.
The trick is to plant the seeds without taking on too much risk. Thus, Nvidia has avoided the vendor financing of the dotcom era and has iteratively shaved its exposure. Equity deals have given way to murky guarantees. Now, Nvidia is looking to convince folks that AI computing is a tradable asset class and get i-banks to invest in data centers on this basis.
Nonetheless, the company can’t escape the underlying risk that ultimately bit Lucent and others in the dotcom era: the world only needs and can pay for so much of this stuff. Just because you’re not keeping an eye on the clock doesn’t mean that you won’t be in the company of mice and pumpkins come midnight.
