amit
2025.11.18 19:29

$NVIDIA(NVDA.US) $Microsoft(MSFT.US) $Amazon(AMZN.US) $Alphabet(GOOGL.US)

the circular financing debate is an important one and deserves a healthy debate

first, it cannot be denied that there is a level of circular financing going on. it’s actually quite obvious when you realize why Nvidia is continuing to make these investments.

however, I think just saying “circular = bubble,” misses the actual point:

is there vast demand for this compute that is outstripping supply which will be independently monetized one day?

basically, are Anthropic and OpenAI seeing the types of demand that would require them to need this much compute? if the answer is yes…

then the second question is do Nvidia, Google, Microsoft, and Amazon want to participate in investing in those companies because they see that demand? obviously those companies buy compute/cloud services from them, but they aren’t investing in them if they didn’t see the independent demand (OpenAI/Anthropic customers) that require all those cloud services, which is why they are investing in the first place

now, the broader comparison to the dot-com bubble is weird here because 1) dark fiber was over built at a massive level which once wasn’t going to be used popped the bubble, today every single GPU immediately is being used ASAP and 2) the monetization of the internet at the time (basically ads) was never going to be enough to justify the investments of capex

for AI, we are seeing incredible growth (waymo, robotics, 650M gemini MAU, 800M chatgpt MAU, enterprise workflow adoption, tesla FSD, productivity margin enhancements) and it seems like these are just the early days of monetization

so yes, Nvidia is spending their hoards of cash to invest in their customers but it’s because those customers actually have REAL demand independent of the cloud providers and NEED the money to build out the compute required to fulfill that demand which should create the revenue needed to not only pay for the buildout but justify the ROI of an investment from Nvidia or any hyperscalers into these foundation model companies

no one knows how it will play out but saying that it’s circular doesn’t seem to fully appreciate why these companies need this money and how they are using it to grow immediately

Source: amit

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