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.
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?”
If I could have shown up somewhere in 2022 with a Mac Studio M1 Max w/ 64GB of RAM running Qwen-3.6-27B or 35B-A3B, I would have pretty much been a demigod - to a degree far more impressive than being able to run Opus 5 locally today.
So yes, I think your scenario is likely to eventually happen, but there will be a much more powerful, capable frontier model then.
"eventually" is actually a function of frontier model capabilities. You only get Qwen6-27B when you have Opus 7 producing extremely high quality tokens for them to train on. So the market for local models is always significantly behind the frontier, by definition.
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.
Yes, if this thing ever gets built, it will set a whole bunch of new records.
If it doesn't get built, it will still set a bunch of records; some of them probably quite infamous.
It is hard to describe the ridiculous scale they are trying to do there. For comparison, typical electrical demand is 17 GW and peaking to 25, with total generation capacity being 30 GW. That includes us-east-2, which is not a small data centre (consumes probably right around 2 GW, so represents about 10% of the state's power demand).
So they're talking about a project that would increase total power consumption in the state over 50%... in addition to building multiple nuclear power plants to fund it. Predicting 2,500 permanent jobs in a county of 27,000 total people, so that's a lot of people moving in.
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.
His numbers might be off or he might not have all of them.
But still I can not escape that he is most likely correct. All of this equipment needs to be paid. With interest and profit. With the usual overheads that the companies run. And if more is being bought each year. It doesn't seem like one and done deal. And then just asking where will all that money come from is very good one. And one we should be very honest about.
If guarantee could be scaled down, it’s not a guarantee, is it? Expected guarantee, proposed guarantee, something along those lines. I think the point here is that the press has been presenting this as an iron-clad guarantee, while in reality, it’s not a guarantee at all.
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[ 1.4 ms ] story [ 11.7 ms ] threadIf 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.
So yes, I think your scenario is likely to eventually happen, but there will be a much more powerful, capable frontier model then.
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.
If it doesn't get built, it will still set a bunch of records; some of them probably quite infamous.
It is hard to describe the ridiculous scale they are trying to do there. For comparison, typical electrical demand is 17 GW and peaking to 25, with total generation capacity being 30 GW. That includes us-east-2, which is not a small data centre (consumes probably right around 2 GW, so represents about 10% of the state's power demand).
So they're talking about a project that would increase total power consumption in the state over 50%... in addition to building multiple nuclear power plants to fund it. Predicting 2,500 permanent jobs in a county of 27,000 total people, so that's a lot of people moving in.
It is not the first time, either; the capital cycle will prevail.
https://s-1.vercel.app/posts/the-capital-cycle-theory/
But still I can not escape that he is most likely correct. All of this equipment needs to be paid. With interest and profit. With the usual overheads that the companies run. And if more is being bought each year. It doesn't seem like one and done deal. And then just asking where will all that money come from is very good one. And one we should be very honest about.
The article title is "Nvidia scales back funding guarantee for Ohio OpenAI data center, WSJ reports".