You would think the effect was the opposite. I think this is worse for OpenAI.
So far, the circular financing from Nvidia has been peanuts for the company. It's roughly equal to giving 5% discount on hardware, not a big deal when the profit margin is 70%. Trying to prop up new neoclouds and competition is a good idea.
As I understand it, the OpenAI investment was much bigger effective discount but still safe because Nvidia invests gradually in installments only when OpenAI invests in data centers: tit for tat. Maybe OpenAI wanted to get the money now and invest it later, as they seem to be running out of cash.
My best guess is that Nvidia is unhappy with how OpenAI is fishing for compute with its competitors (Jensen had some opinions on the AMD-OpenAI deal when it was announced). If this actually becomes a feasible reality, it gives OpenAI (and co) negotiating power - which is bad for Nvidia
Nvidia might have wanted more exclusivity/attachment. And OpenAI still seems to have no problem raising money. So maybe there was just a commitment mismatch
> You would think the effect was the opposite. I think this is worse for OpenAI.
How do we know it wasn't? OpenAI isn't a publicly traded company, and I guess no one who dares writing anything here actually knows how the numbers look on the inside, so for what we know, it could very well have been worse for OpenAI than Nvidia.
You can make a good guess, though - OpenAI had a significant lead, its moat was being a generation or 2 ahead of the competition, and as of the end of 2025, OpenAI, Google, xAI, and Anthropic are pretty much neck and neck. Grok and Gemini are likely to be the top 2 within the next couple months, and the Chinese open models are hot on their heels.
OpenAI is going to be competing for third or fourth place with Anthropic unless one of them pulls off a big capabilities or efficiency leap while remaining believably as good as the other top models. Google and xAI have advantages that the others don't, and are capitalizing on them like crazy. It remains to be seen whether xAI can compete with the Google hardware advantage, but they have economies of scale, differences in mission, and Elon's billions on their side, so it's turning out to be a very interesting race.
Sama could also finagle a funding rabbit or strategic partnership out of his hat and also have the next top tier model, amazing everyone again and keeping a plausible "best in class" lead for a while; OpenAI would have to be down for at least a year before I counted it out completely. It's not looking very pretty for them right now, though.
>It's roughly equal to giving 5% discount on hardware, not a big deal when the profit margin is 70%.
using your numbers, Nvidia didn't drop 70%, it's more on the order of the 5% so at least from that angle, the news narrative holds together superficially.
the hit to microsoft the other day was pretty interesting
I saw reports attributing it to a miss on earnings from Azure but they were off by 0.4% on 39% growth. That's 39% instead of 39.4%. And the company stock dropped 10%. This is all of Microsoft - 10% down (!).
It has to tell you there are a LOT of people primed to sell in a hurry on bad news. The "bubble" talk subsided a lot after nVidia smashed earnings last quarter, but largely overlooked how much their whole situation is based on pent up demand. It completely masks the fundamentals.
I still feel like we're sitting on a volcano and seeing puffs of smoke and feeling earth tremors.
Absolutely. What we’re seeing is a familiar pattern in tech: when things go well, the rewards are private, but when the risks build up—whether financial, regulatory, or technical—they get socialized onto the public. IPOs become a way to offload responsibility, recapitalize, and let early stakeholders cash out while passing long-term uncertainties to a broader set of investors and the market itself.
I think it would be healthy for everyone if the hype around this stuff would die down a bit. There's too much pressure to invest in hardware and too much uncertainty around the business case. I am excited to see what can be built but I hope a bunch of people don't have to get wiped out financially along the way.
Microslop CEO begging for AI $$$ because astronomical overprovisioning is becoming obvious, all big spenders frantically trying to hide CapEx from their books and hallucinate revenue projections like its Enron reloaded and Oracle is already getting sued by bondholders over AI spend [0].
To me CoreWeave is the one to watch. They have to actually bring all these promised datacenters online, operational, and profitable. They basically got a $2B bailout from Nividia a week or so ago but they're back to sinking.
Consumer can eat all the GPUs they have and more if we stop trying to force B2B
Right we have a loop where AI is so expensive (because it's priced to feast on B2B margins) that the best consumer experiences aren't affordable, and they're not affordable so they don't go mainstream, and they're not mainstream so no one is willing to take less money and bank on the incredible volume that would emerge if it went mainstream.
If we can get model pricing cheaper AI entertainment alone will probably carry things (I'm 99% sure NovelAI is already one of their largest customers outside of major AI labs)
If you truly believe this, slowly divest everything into cash, wait for the crash, then buy back in. Even buying in slowly over the course of a crash, on the way down, will save you a ton of money if you're out before it hits.
But you're more likely to just cash out early, lose a bunch of gains, then buy back in later at higher prices.
If you can time the crash you can make a shitload of money. But you can't, so you'll come out better if you just keep buying in every paycheck and ride it out just like you have been.
Invest into stuff that people will need regardless of the bubble popping like medicine, food, internet access, energy, ... . Stay away from luxury/travel stuff.
Also, during a crash there is the so called "flight for quality" where people cash out from risky assets and invest in stable ones that can weather the storm. So, try to invest in assets that are A or above (https://en.wikipedia.org/wiki/S%26P_Global_Ratings). The chart is for countries, but analysts grade companies as well in case you want to stay away from treasuries/national bonds.
Also diversify geographically. US will likely take the biggest hit if the bubble pops, so perhaps European markets that lagged behind in adopting the technology are safer (IMHO).
Personally, I am preparing by moving money from growth items to stable ones a bit at the time. To diversify even further I am using ETFs that, in addition to what mentioned above
1) pay dividends (whether these distributed or reinvested doesn't really matter)
2) are denominated in or hedged in safer currencies (CHF especially, but also Euro)
You definitely get smaller returns, but the name of the game is to maintain what you have, not to make heaps of money.
Finally, I am not a financial advisor, so do your own valuations/risk assessment analysis.
Current US debt to gdp is 124%, 38.6 trillion.
Japan too at 230-240%.
Bond markets in both are looking seriously unhealthy (Japan going via a Liz Truss moment at present).
If the AI bubble falls over, the US government is going to have to print 5 trillion to cover the bubble at least. The only option there is inflate away anyone holding cash.
If hte AI succeeds and people are replaced, the US government faces a massive fiscal cliff of a loss of tax receipts. They won't be able to service the debt and again will be forced to inflate away.
To service current debt projects, AI growth needs to return some 3.2-3.5%, it is currently 0.5%.
Bonds, equities, USD, and housing are all risk assets right now.
Primarily the fault of our governments not using anti-trust laws for real in, like, decades.
Governments actually do have the power to regulate the economy and to prevent catastrophic crashes from occurring. The warning signs for the AI bubble have been visible for well over a year now, when the entity relationship map between the major players began to resemble a Habsburg family tree... and yet, nothing was done.
Literally all the cloud providers have been reporting severe capacity crunches for the past few quarters -- to the tune of backlogs of triple-digit billions each. As a reminder, a backlog or "Remaining Performance Obligation" (RPO) is money their customers have committed to them but they could not realize because they didn't have enough capacity to serve their workloads. Which is why they are all committing to double-digit billions each in AI CapEx spend over the next few quarters.
And most of them (aside from Oracle, which is trying to borrow its way into this gold rush) are investing money from their double digit billions in profit (per quarter!) into this spend... money that they could have otherwise comfortably held on to for something more palatable to share-holders.
Revenue and return on investment is a valid concern to bring up in this whole GenAI shebang; demand is not.
I thought this was already revised? Jensen Huang said they’ll be investing more than ever:
> Nvidia is likely set to make its “largest ever investment” in ChatGPT firm OpenAI, despite reports that the deal may be under threat in recent weeks. The chip giant’s CEO, Jensen Huang, didn’t say exactly how big the investment would be, but said it would be “nothing like” the $100 billion figure mentioned in the September partnership agreement.
Readit News
So far, the circular financing from Nvidia has been peanuts for the company. It's roughly equal to giving 5% discount on hardware, not a big deal when the profit margin is 70%. Trying to prop up new neoclouds and competition is a good idea.
As I understand it, the OpenAI investment was much bigger effective discount but still safe because Nvidia invests gradually in installments only when OpenAI invests in data centers: tit for tat. Maybe OpenAI wanted to get the money now and invest it later, as they seem to be running out of cash.
Nvidia might have wanted more exclusivity/attachment. And OpenAI still seems to have no problem raising money. So maybe there was just a commitment mismatch
Pure speculation though
How do we know it wasn't? OpenAI isn't a publicly traded company, and I guess no one who dares writing anything here actually knows how the numbers look on the inside, so for what we know, it could very well have been worse for OpenAI than Nvidia.
OpenAI is going to be competing for third or fourth place with Anthropic unless one of them pulls off a big capabilities or efficiency leap while remaining believably as good as the other top models. Google and xAI have advantages that the others don't, and are capitalizing on them like crazy. It remains to be seen whether xAI can compete with the Google hardware advantage, but they have economies of scale, differences in mission, and Elon's billions on their side, so it's turning out to be a very interesting race.
Sama could also finagle a funding rabbit or strategic partnership out of his hat and also have the next top tier model, amazing everyone again and keeping a plausible "best in class" lead for a while; OpenAI would have to be down for at least a year before I counted it out completely. It's not looking very pretty for them right now, though.
Enron thought the same thing. Until they had a closer look at what their middle managers were actually doing to the books.
using your numbers, Nvidia didn't drop 70%, it's more on the order of the 5% so at least from that angle, the news narrative holds together superficially.
I saw reports attributing it to a miss on earnings from Azure but they were off by 0.4% on 39% growth. That's 39% instead of 39.4%. And the company stock dropped 10%. This is all of Microsoft - 10% down (!).
It has to tell you there are a LOT of people primed to sell in a hurry on bad news. The "bubble" talk subsided a lot after nVidia smashed earnings last quarter, but largely overlooked how much their whole situation is based on pent up demand. It completely masks the fundamentals.
I still feel like we're sitting on a volcano and seeing puffs of smoke and feeling earth tremors.
https://medium.com/@Arakunrin/the-post-ipo-performance-of-y-...
Also a portion of their Azure spend was some clever accounting they did if memory serves me
https://www.geekwire.com/2026/microsofts-historic-plunge-why...
Did Oracle spin off Cerner yet?
Microslop CEO begging for AI $$$ because astronomical overprovisioning is becoming obvious, all big spenders frantically trying to hide CapEx from their books and hallucinate revenue projections like its Enron reloaded and Oracle is already getting sued by bondholders over AI spend [0].
It will be worse than the dot com bust.
0: https://www.reuters.com/sustainability/boards-policy-regulat...
https://ts2.tech/en/coreweave-stock-slips-as-class-action-no...
90% of their stock is being used as collateral against 33 banks for 18 billion stargate loan to OpenAI.
Given Japanese bond markets right now, 30% circular financing, if the AI narrative falls, ARM is gonna blow up.
Right we have a loop where AI is so expensive (because it's priced to feast on B2B margins) that the best consumer experiences aren't affordable, and they're not affordable so they don't go mainstream, and they're not mainstream so no one is willing to take less money and bank on the incredible volume that would emerge if it went mainstream.
If we can get model pricing cheaper AI entertainment alone will probably carry things (I'm 99% sure NovelAI is already one of their largest customers outside of major AI labs)
But you're more likely to just cash out early, lose a bunch of gains, then buy back in later at higher prices.
If you can time the crash you can make a shitload of money. But you can't, so you'll come out better if you just keep buying in every paycheck and ride it out just like you have been.
https://www.investopedia.com/your-s-and-p-500-index-fund-mig...
https://www.cnbc.com/2025/10/22/your-portfolio-may-be-more-t...
Also, during a crash there is the so called "flight for quality" where people cash out from risky assets and invest in stable ones that can weather the storm. So, try to invest in assets that are A or above (https://en.wikipedia.org/wiki/S%26P_Global_Ratings). The chart is for countries, but analysts grade companies as well in case you want to stay away from treasuries/national bonds.
Also diversify geographically. US will likely take the biggest hit if the bubble pops, so perhaps European markets that lagged behind in adopting the technology are safer (IMHO).
Personally, I am preparing by moving money from growth items to stable ones a bit at the time. To diversify even further I am using ETFs that, in addition to what mentioned above
1) pay dividends (whether these distributed or reinvested doesn't really matter) 2) are denominated in or hedged in safer currencies (CHF especially, but also Euro)
You definitely get smaller returns, but the name of the game is to maintain what you have, not to make heaps of money.
Finally, I am not a financial advisor, so do your own valuations/risk assessment analysis.
Current US debt to gdp is 124%, 38.6 trillion. Japan too at 230-240%.
Bond markets in both are looking seriously unhealthy (Japan going via a Liz Truss moment at present).
If the AI bubble falls over, the US government is going to have to print 5 trillion to cover the bubble at least. The only option there is inflate away anyone holding cash.
If hte AI succeeds and people are replaced, the US government faces a massive fiscal cliff of a loss of tax receipts. They won't be able to service the debt and again will be forced to inflate away.
To service current debt projects, AI growth needs to return some 3.2-3.5%, it is currently 0.5%.
Bonds, equities, USD, and housing are all risk assets right now.
And whose fault is that?
However, the consequences are always applied to everyone but the executives and board.
Primarily the fault of our governments not using anti-trust laws for real in, like, decades.
Governments actually do have the power to regulate the economy and to prevent catastrophic crashes from occurring. The warning signs for the AI bubble have been visible for well over a year now, when the entity relationship map between the major players began to resemble a Habsburg family tree... and yet, nothing was done.
???
Literally all the cloud providers have been reporting severe capacity crunches for the past few quarters -- to the tune of backlogs of triple-digit billions each. As a reminder, a backlog or "Remaining Performance Obligation" (RPO) is money their customers have committed to them but they could not realize because they didn't have enough capacity to serve their workloads. Which is why they are all committing to double-digit billions each in AI CapEx spend over the next few quarters.
And most of them (aside from Oracle, which is trying to borrow its way into this gold rush) are investing money from their double digit billions in profit (per quarter!) into this spend... money that they could have otherwise comfortably held on to for something more palatable to share-holders.
Revenue and return on investment is a valid concern to bring up in this whole GenAI shebang; demand is not.
> Nvidia is likely set to make its “largest ever investment” in ChatGPT firm OpenAI, despite reports that the deal may be under threat in recent weeks. The chip giant’s CEO, Jensen Huang, didn’t say exactly how big the investment would be, but said it would be “nothing like” the $100 billion figure mentioned in the September partnership agreement.
https://www.pcmag.com/news/nvidia-ceo-well-make-our-largest-...