Jensen Huang Says Nvidia Is Pulling Back From OpenAI and Anthropic (techcrunch.com) 26
An anonymous reader quotes a report from TechCrunch: At the Morgan Stanley Technology, Media and Telecom conference in downtown San Francisco Wednesday, Nvidia CEO Jensen Huang said his company's recent investments in OpenAI and Anthropic are likely to be its last in both, saying that once they go public as anticipated later this year, the opportunity to invest closes. It could be that simple. While firms sometimes pile into companies until practically the eve of their public debut in search of more upside, Nvidia is minting money selling the chips that power both companies -- it's not like it needs to goose its returns by pouring even more money into either one.
Nvidia, for its part, isn't offering much more on the matter. Asked for comment earlier today following Huang's remarks, a spokesman pointed TechCrunch to a transcript from the company's fourth-quarter earnings call, where Huang said all of Nvidia's investments are "focused very squarely, strategically on expanding and deepening our ecosystem reach," a goal its earlier stakes in both companies have arguably met. Still, a few other dynamics might also explain the pullback, including the circular nature of these arrangements themselves. [...] Meanwhile, Nvidia's relationship with Anthropic has looked fraught in its own right. Just two months after Nvidia announced a $10 billion investment in November, Anthropic CEO Dario Amodei took the stage at Davos and, without naming Nvidia directly, compared the act of U.S. chip companies selling high-performance AI processors to approved Chinese customers to "selling nuclear weapons to North Korea." Ouch. [...]
Where that leaves Nvidia is holding stakes in two companies that, at this particular moment, are pulling in very different directions, and potentially dragging customers and partners along for the ride. Whether Huang saw any of this coming, given Nvidia's web of partnerships, is impossible to know. But his stated reason on Wednesday for likely pulling the plug on future investments -- that the IPO window closes the door on this kind of deal -- is hard to square with how late-stage private investing actually works. What's looking more probable is that this is an exit from a situation that has gotten really complicated, really fast.
Nvidia, for its part, isn't offering much more on the matter. Asked for comment earlier today following Huang's remarks, a spokesman pointed TechCrunch to a transcript from the company's fourth-quarter earnings call, where Huang said all of Nvidia's investments are "focused very squarely, strategically on expanding and deepening our ecosystem reach," a goal its earlier stakes in both companies have arguably met. Still, a few other dynamics might also explain the pullback, including the circular nature of these arrangements themselves. [...] Meanwhile, Nvidia's relationship with Anthropic has looked fraught in its own right. Just two months after Nvidia announced a $10 billion investment in November, Anthropic CEO Dario Amodei took the stage at Davos and, without naming Nvidia directly, compared the act of U.S. chip companies selling high-performance AI processors to approved Chinese customers to "selling nuclear weapons to North Korea." Ouch. [...]
Where that leaves Nvidia is holding stakes in two companies that, at this particular moment, are pulling in very different directions, and potentially dragging customers and partners along for the ride. Whether Huang saw any of this coming, given Nvidia's web of partnerships, is impossible to know. But his stated reason on Wednesday for likely pulling the plug on future investments -- that the IPO window closes the door on this kind of deal -- is hard to square with how late-stage private investing actually works. What's looking more probable is that this is an exit from a situation that has gotten really complicated, really fast.
Translation (Score:3)
"We're going to collect our money back in the IPO. We're going to be keeping that money, because at least one of your companies will probably not exist in 12-24 months time"
The other thing not said is that post IPO, only really, really big investors that can swing votes in the AGM get much say in the way the company operates. As such, any future investment may not guarantee they purchase nvidia chips, and so would be a far less lucrative investment for nvidia to make.
Re: (Score:1)
That word is thrown around so much it means nothing. Jensen is a fascist?! That doesn't make any sense. Annoying, cringe, greedy,
But to be fair to the man, he did found nvidia. I still remember my first TNT2 video card; so much better than dealing with the Voodoo2 and the VGA bypass. He ended up buying out
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The Rest is History [podcast] [apple.com] has a nice 47 minute podcast episode on a very strict and useful definition of fascism. (tl;dl - Mussolini fit the definition best, if you're not Mussolini or from his time period you start to stray from what fascism means).
And there are many definitions of fascism that are frequently debated. I tend to favor what is historically accurate and communicates effectively, which means we're kind of stuck leaving fascism in the 20th century and have to come up with new ways to descri
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More realistically, they just need a lot of money right now to invest into new production lines. TSMC keeps raising prices and requires quite a bit of investment up front at this point for example.
They also need to expand design efforts, as there are a lot of AI accelerator chips coming within a couple of years. They need to invest a lot to continue staying ahead. Remember that Nvidia is a hardware design company. Everyone has been trying to poach their engineering staff, and competition for relevant staff
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Nvidia itself disagrees:
https://www.nvidia.com/en-us/d... [nvidia.com]
"NVIDIA Blackwell-architecture GPUs pack 208 billion transistors and are manufactured using a custom-built TSMC 4NP process".
Notably previous generation Hopper is also TSMC 4NM
You're probably thinking about who makes the RAM for these things, and one of the RAM partners is indeed Samsung. Other is SK Hynix.
You could also be thinking about older generation 30 series GPUs. Those were made on Samsung 8nm, and if memory serves me right, problems with that
Re:Translation (Score:5, Interesting)
They make things; they're not investors. Often these kinds of "investments" from companies like NVIDIA are not cash injections into companies, they're in-kind. So if their chips and GPUs are priced at let's say $10,000, and they make a $1B "investment", they're really giving their investment 10,000 GPUs, not $1B in cash. But note, they're priced at $10,000; it costs NVIDIA likely $2,000 to make and the rest is overhead and marketing. So an "investment" in OpenAI comes back to them in the form of sales, that are non-cash sales but still accounting sales.
Now they go public, and let's say their investment nets $3B on the $1B. That's essentially like making $30,000 on a $10,000 product that cost them $2,000 to make; a real windfall.
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Note that the original deal didn't seem to confer nVidia equity, so the IPO wouldn't have mattered in that one, which is why so many people blasted it as absurd.
Their new deal that replaces the old is actually less money and nVidia gets equity for their trouble, so it's a much more understandable move.
But it should be seen as a sign that nVidia went from $100B to them for not much in return, to $30B for equity to "we're done now" in pretty short timeframe.
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Seems like a pretty good play from Nvidia. They stoke the "OMG must have GPUs now!" hysteria for the cheap price of $30 billion in overpriced product that they'll probably get back as cash in an IPO in a year.
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I wonder (Score:4, Insightful)
I'm sure he's already called the president saying "I'm not investing in those evil companies anymore, can I please sell my AI crap to China now?"
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Seems interesting, guess we will know if nVidia suddenly goes crazy throwing cash at xAI instead...
Well, we know what he really means. (Score:3)
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These bubbles are a bit of a game of musical chairs. And if you also get to control when the music stops you have a pretty significant advantage.
Investing in a company building their own chips (Score:2)
investing in a company who is building their own chips is likely a bad business strategy. Is NVIDIA working on their own AI service? It seems like they may be hedging their bets for when some of these companies start building their own chips for AI processing. Providing investments top empower a customer to develop their own chips sounds like a poor strategy.
Going back to shovels for the gold rush (Score:3)
Inclined to think they want to step back and go back to be more strictly an 'arms dealer' and step away from specific players. Frankly a small number of people controlling most of the purchasing is actually bad news for nVidia, as those folks have way too much leverage. If one day OpenAI announces a pivot to another hardware platform, nVidia would be hosed, and historically these big tech companies tend to at least have the hubris to think they should make bespoke hardware for themselves instead of being plebes that buy anything vaguely off the shelf.
nVidia is trying to push hard to get *everyone* wanting to buy their stuff, and hopefully even higher margin than big purchasers would abide. Having big AI companies just stuff them into off-premise datacenters just denies nVidia a great deal of control over their fortunes.
Potentially catastrophic results (Score:2)
Gold rush is over. It's more of a Plutonium rush and when someone achieves critical mass we'll the permanent impact AI has on our society.
Cue AMD (Score:2)
Dr. Lisa Su has entered the building...
Pickaxe vendor stops extending credit... (Score:2)
That's all this is, nVidia realizes that if the bubble were to pop tomorrow, they could survive... but they might not if they keep extending credit to companies that might not be able to ever generate a return on that investment.
It's just like the guy selling pickaxes and shovels saying "you've had long enough to find gold, no more credit for you."
The sound of bubbles starting to pop? (Score:2)
This is about the first news I've heard, that sounded like anything other than breathless enthusiasm for AI investments. Yeah, I know people have been complaining about the dark side of AI since the beginning. But the big money still kept flowing. This seems like the first pullback financially. This could well lead to a cascade.