This is meaningless in the long run; the broader problem is the constant circular financing and "Fake profits".

It is not the first time, either; the capital cycle will prevail.

https://s-1.vercel.app/posts/the-capital-cycle-theory/

It's worth noting that this is deal that has never been signed previously.

There's a release from DoE about it: https://www.energy.gov/articles/fact-sheet-department-energy...

That's a horrible amount of gas energy generation.

https://www.datacenterdynamics.com/en/news/openai-in-talks-t... has more details. The whole campus build could be as much as $500B.

Would that be the most expensive single thing ever built? The ISS cost around $150B and is commonly said to be the most expensive single item, but that does include running costs.

Nvidia is turning into a savings and loan company that happens to design computer chips on the side. What could possibly go wrong.

The loans will just take longer to repay. There is a market for Anthropic & OpenAI, it just likely doesn't have the 200B profit each year required for the maths to make sense.

If shit hits the fan, the companies collapse, then Nvidia gets their money from the investors anyways.

NV might end up owning them.

This is probably a lot more related to the fact they want to make GPUs an asset class. Nvidia is banking on the fact there will be an entire market that will guarantee whatever anyone needs.

I would like to see the numbers.

If Nvidia sells hardware for $100B with 75% cross margin, and provides $50 billion in backstop for that same hardware, it would be still be nicely profitable deal ($25B) if the backstop capacity would be a total write-off recovering $0. Reselling that capacity in some large discount below already low backstop price would increase the profits.

It's all those pension funds, sovereign wealth funds and Softbank getting into that $500 billion deal that will be hurt.

Pretty much, I have said it for a while now, Softbank and Oracle are the ones I would be worried about. Both of them have put their companies wealth behind this, if it goes down so will they.

Others have played it fairly smart in terms of insulating potential issues.

A better world is just a few steps away

SoftBank has always managed to squeeze by after every mistake selling some early huge wins Alibaba, Nvidia, arm. Wonder if they still have any of those left in the back pocket.

Indeed, Masa has more lives than a cat.

Businesses aim to make the most profit possible with their resources. If they can make a 25% margin that is good, but if they can turn around sell thr same thing for a 50% margin, that is much better.

Basically what i am saying is maybe there is a better buyer than openai.

In other words: the investments that were never going to happen are not going to happen.

While it is true they haven't lost anything, it does signal to shareholders, potential share holders and current VC's the direction of things.

What would happen to Nvidia, Anthropic, OpenAI, if tomorrow someone released an open weights model on HuggingFace that matched performance and accuracy of Opus 5 running locally on an RTX 5070? That won’t happen tomorrow, but it will likely happen someday… what’s the plan beyond “don’t be the one holding the bags?”

There’s no reason to assume frontier-level intelligence eventually collapses all the way onto a midrange consumer GPU. In fact, there are quite a few reasons not to assume that (information-theoretic constraints, etc).

If you could run Opus 5 on a 5070 then the labs must have achieved RSI at that point

Those companies will be quick to copy the tech, inference cost would plummet and there is a greater chance that these companies could make it to solvency. At least in the short term. Long term it might not be so great as consume hardware catches up.

Nothing would really change IMO? 99% of users don't have anything like a RTX5070 (mobile especially).

Even if it did, it still doesn't make much economic sense running a model locally vs on a datacentre.

For example, I managed to just about squeeze a Q2 quant of Qwen 3.7 27b on my 9070XT. I get around 60tps decode (slightly faster prefill). _but_ it uses 300W of power to do so. At UK electricity rates of 30c/kWh this works out at something like 42c/MTok. I can get far far better models on openrouter cheaper than that, plus I'm not horrendously constrained on context length.

I dunno a lot of things said about AI economics sound like an IBM executive making reassuring statements about their terminal/mainframe business before the personal computer took off.

Like even if you run it in a datacenter in this scenario, you could do it on a cheap GPU instance in Azure, you still wouldnt need OpenAI or Anthropic specific clouds.

>uses 300W of power to do so.

There are plenty of people with phat electricity pipes in their on prem server rooms that have been vacated for cloud. Companies who want the benefits of AI but dont want the risk of sending their data to foreign API endpoints.

It seems very very unlikely that an Opus 5 matching local model that runs on a 5070 will be released within the next 5 years (I don't want to say "ever").

If it does happen then NVidia will sell a lot of 5070s though!

inference is the cheap part; training is expensive. what compute infrastructure would train this mythical magic model?

Exactly. If OpenAI and Anthropic didn't have to train new models, they'd (probably) be instantly profitable and with good margins.

Inference time scaling means whoever had the most compute has the highest intelligence model.

The Möbius strip of AI financing continues…

it seems much more like Relativity by M. C. Escher where no one is quite sure how to exit without bringing everything down with them?