NVIDIA Invests $99 Billion in AI Companies - Hyper Scaling Financial Engineering

Eli the Computer Guy (0:00)

And around and around the money goes. From CNBC, Nvidia's investments grow to $99 billion as Chip Giant becomes major backer of AI companies, because definitely nothing is going to go wrong with that particular plan. So one of the things that I've been talking about for a while, and other people have been talking about for a while, is that the real money for artificial investment has basically dried up. We've seen this with Oracle a number of months ago, where they literally had to lay off something like 21,000 employees, simply to free up enough money to be able to build the data centers, so that they can fulfill their contracts with OpenAI, and OpenAI has a $300 billion contract with Oracle. And the reason for this is because the banks were no longer willing to provide debt in order to finance basically building out the data centers. The banks are looking at all these data centers getting built out. They're looking at the AI fraud, and they're thinking, it's about time to get off of this Titanic, right? Investors, normal investors, are not pumping as much money into the AI fraud anymore, because everybody's realizing, it's a wee bit, it's a wee bit wee, it's a wee bit, like, how do you, how do you really explain the taste of the air before the bubble burst? It's very hard to explain it, but what we're seeing is from a lot of the investors and a lot of the folks that would provide debt normally, that they are basically closing up their pocketbooks, kind of waiting to see what is going to happen. And so in any normal world, right, if this wasn't 2026, if this was 2016 or 2006, this would be about the time that the bubble would start to deflate. But the issue is, is that there is so much money out there that the AI companies have already gathered so much money from investments, that's basically what's happening is they're using the money that they already have acquired to basically fund the other companies that are part of the fraud, so that they can just keep this fraud going, right? So you have Nvidia. And to be clear, Nvidia truly is profitable. Nvidia is not OpenAI. It is not Anthropic. It is printing cash. But again, it's printing cash because Anthropic and OpenAI and such are buying all of their GPUs. That's its own thing. But anyways, it has all of this profit currently, and it's currently about a $5 trillion company. And one of the big problems for Jensen Wong is that their company is basically at the top of the market. They essentially own the total addressable market. There's very few places for them to go from here. And so one of the big concerns is when you have a corporation in this particular situation is that really, the only real place for them to go is down. And that's not being snarky, that's not being mean, and that's not saying nasty things about Jensen Wong's leather jacket. That's just kind of how economics works. At a certain point, investors want to buy low, sell high. So one of the problems you get to, especially for these technology companies, is that as soon as they plateau, plateauing alone is actually a signifier for death. Because if you plateau, I don't want to buy your stock for $1,000 and sell your stock for $1,000. I want to buy your stock for $1,000 and sell it for $5,000. So if your stock value plateaus, it's like, well, I bought it for $1,000, and now maybe I can sell it for $1,005, but that's not really worth it. So I'm going to start selling. And then people start selling and selling and selling and selling and selling, and then things go down. And so one of the things Jensen Wong has to do is he has to figure, he has to figure out how to goose the marketplace, how to gas up the marketplace so that people continue to buy their products long past when it makes sense. So that shows that they're getting more revenue, getting more sales, getting more profit, the whole nine yards in order to try to keep the value of their stocks going up and up and up. And so basically that is where Nvidia is now taking their troves of cash to now dump back in to the AI companies that are purchasing equipment from them to keep this whole cycle going. Spoiler, spoiler, it's going to end badly. All of this is going to end badly. Why is it going to end badly? Because it always ends badly.

Anyways, the only difference with this particular generation of bubble is the insane scale that we are talking about here.