randyrand22 minutes ago
Circular is a dumb way to describe it IMO, because it's not like both parties end up in the same place.
Nvidia is making trades for people to buy their GPUs.
Sometimes companies are trading stock for GPUs, sometimes money, other times something else.
In summary, Nvidia is selling GPUs.
thewebguyd7 minutes ago
Right. The risk isn't accounting fraud, its the equity-to-debt loop that relies on all these companies making "enough money to pay it back someday."
Nvidia invests, that equity check gets used to secure 10x it in debt with the GPUs as collateral, and then they buy the chips.
Nvidia gets paid, so they don't hold the debt reliability. But, if AI revenue doesn't cover those debt payments before the GPUs depreciate, the loop starts to unravel, and fast. CoreWeave, Oracle, all the "neoclouds" etc. will blow up, and there could potentially be a ton of PE debt that is now under-collateralized due to depreciation, causing a pretty big haircut to basically all of private credit.
georgemcbay21 minutes ago
Its only a problem if you think about it, just don't think about it and no problem!
randyrand19 minutes ago
It's only a problem if you dont think about it.
Analemma_12 minutes ago
They're selling GPUs in exchange for scrip which may or may not be able to pay Nvidia's operating expenses depending on whether AI has a profitable business model. This isn't hard to understand.
thewebguyda few seconds ago
No, Nvidia is getting paid. Nvidia puts down a fraction of equity cash, and the recipients are taking that to PE to finance debt, using the GPUs as collateral. So Nvidia pays $1B, receiving company uses it to secure $10B in debt and buys $10B worth of GPUs.
Nvidia gets real cash, pays TSMC, etc.
The people in real trouble are companies like CoreWeave, Oracle, etc. that took an IOU from OpenAI (for example) to start a buildout, entirely debt financed. It works out so long as demand keeps going up, but the moment the music stops and that debt comes due and there's no revenue to pay it, game over.
Nvidia's concern isn't not actually getting paid, it's being faced with a glut of cheap, depreciated GPUs flooding the market impacting their future revenue. They'll live.
But OpenAI, not being able to pay CoreWeave, for example, that IOU, and then private credit coming for the debt payments from CoreWeave, is what would start the chain reaction.
Marciplan18 minutes ago
are you just heavily invested in Nvidia to not see this as problematic?
ar_lan7 minutes ago
We all are, mostly.
wonnage11 minutes ago
Looks like you discovered an infinite money glitch! As long as you’re selling things at a profit, all you need to do is take those profits and give them to your customers to buy more things, repeat the loop a few times and you can become a billionaire food vlogger just like Jensen
mhitza34 minutes ago
Alternative source https://finance.yahoo.com/technology/ai/articles/nvidia-plan...
> The concern is familiar: NVIDIA money funds customers who then buy NVIDIA chips.
jdalgettyan hour ago
At what point do I start taking money out of my VTI holdings and parking it in cash - there is no way the market keeps going up.
jshen40 minutes ago
First, don't park it in actual cash or you'll lose value to inflation which is currently running high. At a minimum put it in treasuries.
Second, trying to time the market is almost always a suboptimal strategy. The question is when will you likely need the money? If you won't need it for 10 years or more, keep it in index funds. Otherwise, treasuries.
ericpauley20 minutes ago
Personally I tend to assume anyone talking about VTI knows about the risk-free rate.
fullshark25 minutes ago
Just need a larger emergency fund to mitigate the risk, especially if you work in tech and you feel the crash would heavily impact your labor earnings (including possibly extended unemployment)
scrappyjoean hour ago
Park it in BRK?
nickffan hour ago
BRK has been roughly flat since the beginning of 2025; you might be better off in bonds or money markets (depending on your beliefs about near-term inflation).
bryanlarsen32 minutes ago
BRK is 40% cash at the moment. I think "roughly flat" is evidence they're performing the strategy the OP wanted.
BRK has stated that they'll buy back in when prices are reasonable again, so it's an automatic "sell-high buy-low" strategy.
niklasd37 minutes ago
Not that I have any skills in stock-picking whatsoever, but couldn't the recent lukewarm performance not also be an argument for BRK?
I mean their cash pile is also invested in money markets (so you get that), and the rest of the portfolio consists of quality companies where their (combined) valuation didn't explode in the last 1,5 years. So it's an opportunity to invest into something that might not be overheated.
DougN740 minutes ago
It’s such an obvious Ponzi scheme the companies should get delisted.
le-mark28 minutes ago
[flagged]
NegatioN29 minutes ago
meangenehackman44 minutes ago
It is far better for society when companies like Nvidia spend their money rather horde it like Apple.
Nobody (including the dragon) benefits from sitting on piles of gold.
pinkyboy22 minutes ago
Apple is a $5t company that has $45b cash-on-hand.
Your post is "cute", but 3 or 4 months of operating cash isn't a great example of "sitting on piles of gold".
joaquieneCnix41 minutes ago
DRAM will get to the moon before we get ...
renegade-otteran hour ago
They are just adding zeros to already obnoxious numbers that make no sense. The endgame is on.
theideaofcoffeean hour ago
It's come to a point (or has it passed it) that these numbers are completely meaningless. One hundred billion here, $750B there, $1.2T over a year or so, toss in $300B for a few hyperscalers there. There's no imaginable scenario where these are actually backed up with real profit to where the investments make sense. Just passing the same hundred dollar bill among everyone and all booking it as revenue. I can't wait until it pops.
gdulli20 minutes ago
Displacing a vast amount of labor is what makes the numbers make sense. We don't know if they'll succeed or not, but it's obviously what they're chasing.
In addition to actual lost jobs, replacing a skilled white collar worker with a fungible operator of AI lowers the salary for that role significantly.
bwfan1232 hours ago
I guess it gets bigger with each passing day. Tens of billions goes to Hundreds of billions.
vannevaran hour ago
It has to get bigger. As soon as it starts shrinking, the next round of debt will no longer be able to cover the prior round of commitments. What is happening in AI is essentially a gigantic version of what is happening in consumer auto loans, they just keep refinancing for more and more money. Eventually there will be no one willing to lend them more, and then they'll go to the government to bail them out.
ryandvm38 minutes ago
Yeah, I'm pretty sure we've already passed some sort of fiscal singularity where economic and political interests are so intertwined that there can only be growth. If there ever isn't growth, then the legislators (who are elected via corporate sponsorship) will pull whatever levers necessary to make sure that there will always be asset growth.
It's some sort of tragic positive feedback loop that isn't going to stop until the whole thing comes crashing down for everyone and we're paying $37,000 for a loaf of bread.
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apercuan hour ago
I'm not sure a government can bail out these irrational companies and have it not be political suicide.
fullshark37 minutes ago
I'd kill my political career for the private sector rewards sure to follow.
SoftTalker27 minutes ago
Those companies are already roundly hated by the general voting public, so I agree.