Nvidia seems to be operating more like a sovereign wealth fund than a traditional business. They have a very-in-demand product, that is not likely to last forever, and is getting their fingers in as many pies as possible with the money and influence while they have it.
Yes but they're using this fund to prop up their core business (and share price) by artificially creating demand for their own products. Most of the money that they invest comes back to them when these companies buy GPUs.
I wouldn't say they are artificially creating the demand. They artificatially create capacity to make a purchase by enabling their customers to pay with ownership of their business rather than with money. It's just an alternative financing scheme.
> They artificatially create capacity to make a purchase
If the company did not intend to purchase anything but Nvidia used the investment to "incentivize" a purchase then this is artificially creating demand where there used to be none. It's very different from Nvidia allowing a company to purchase Nvidia products that they already wanted to purchase but pay with stock.
Are you implying that 1B investment gives Nvidia control over Nokia procurement?
Then they are acting as a lender which can be problematic.
I think this will continue. They can't change 3GPP's vision with just Nokia. They need to bribe other companies. Ericsson is the other big vendor. I think there is a possibility of that. However, Huawei is impossible. Who is gonna provide a GPU to them? Therefore, they simply can't just put a GPU on every base station around the world.
>Therefore, they simply can't just put a GPU on every base station around the world.
I dont think that is what's happening here. Base station has been power limited for quite some time and part of the whole 5G / Cloud RAN promise was moving a lot of the processing off base station. Ignoring GPU there are a lot of the current stack fits Nvidia portfolio especially DPU. May be Nvidia have figure out a way to use CUDA and have it perform better than Ericsson and Huawei.
Nokia is also the smallest of the three and has been in decline for quite some time. Part of me also wish Nvidia just buy Nokia and start competing against Ericsson and Huawei.
You are right on your points. I agree on DPU but it's on the network stack. I think Nvidia wants to get into the PHY and MAC layer (CuPHY, etc.). That's where I find it unlikely due to the cost of latency. If Nvidia had wanted to buy Nokia, they could've already completed the deal. It's a possibility in the future but this $1B investment kind of showed that they are more interested in creating artificial demand for their GPUs rather than diversifying their product portfolio. I agree with you that Nvidia should just buy Nokia.
Strategic Enablement
Yup, give them $1B so they can build out AI DC’s stocked with $1B of Nvidia chips.
More importantly than gaining a client for Nvidia's AI chips, this investment gives the company a solid foothold in a competitor to Broadcom in the wireless, datacenter and networking solutions space. I wouldn't be surprised if Nvidia eventually scoops up all of Nokia.
> I wouldn't be surprised if Nvidia eventually scoops up all of Nokia.
That is what I wish would happen as well.
Except Nokia use Broadcom chips in pretty much all their datacentre and cheapo networking products.
buy in, let them use your money to buy your product back from you, then if you think they'll actually succeed you make money and if not you can slowly dump that stock back onto the market and end up ahead. you've basically manufactured a customer at that point.
Exactly, the risk is extremely small. If they fail, there will be others too, which means that WSBro’s can bundle and derivatives their way into at least a neural exit.
As it seems now, they are into producing silicon that does massive parallel calculations, and variants on it thereof.
To me, that seems to be a requirement for the computing industry for a long time.
And, they seemed to have amassed enough capital to comfortably pivot to the next great thing that requires similar calculations.
I think this is their super power.
The next logical step would be to get into CPUs, to become a fully integrated computing solutions provider.
> To me, that seems to be a requirement for the computing industry for a long time.
Sure, but they have a market cap of 5 trillion. It's about 10x that of AMD, which also sells similar silicon (and isn't in any distress). It's more than Apple, Google, and Microsoft - and these companies historically found ways to make more money than the vendors they buy chips from.
The problem isn't that Nvidia doesn't have good fundamentals or good products, it's that the market is expecting miracles.
In the case of Nvidia, the funny thing is that their high valuations started not with AI, but with cryptocurrencies. Just never really came down - they coasted from a silly hype cycle to a more substantive one. Ten years ago, NVDA wasn't an interesting stock at all.
Stock values go up when people buying stocks expect them to go up.
Stock values go down when people holding stocks expect them to go down.
Why would you hold a stock if you think it should go down? If you think the stock is valuable but in the near term should go down, why not sell and then buy in increments as it goes down?
Because not everyone is in it for the short term.
Tax reasons might be one as well, long term capital gains are taxed less.
There are few investors that can spend the time it takes to be active like that.
Most people buying individual stocks are better of buying ETFs anyway.
In the end it's a choice on what to spend your time on.
Because stocks have a tendency to go up even when they should be going down. And when you decide that it probably isn't going down, it will go down. Timing the market isn't a reliable way of wealth generation. Long term investing is.
Indeed. Since most stock are mostly held by institutional investors, prices are heavily guided by sentiment.
Except when they aren’t, see GameStop and Beyond Meat.
Prices are heavily guided by sentiment. Nobody said sentiment HAS to be tied to the entity's fundamentals. GameStop stock moved due to sentiment external to the entity itself.
> The next logical step would be to get into CPUs, to become a fully integrated computing solutions provider.
They already tried it 5 years ago [1][2] but it was promptly blocked by regulators.
[1]: https://nvidianews.nvidia.com/news/nvidia-to-acquire-arm-for...
[2]: HN discussion https://news.ycombinator.com/item?id=24464807
They were prevented from buying out ARM.
They can always license their IP and make products out of that.
Some of their systems most likely have such chips already in them.
It wouldn't surprise me if they are looking into making their own RISC-V CPUs, since their coprocessor already is build on it already. They also are porting CUDA to RISC-V (specifically RVA23 is their minimum supported) so it would somewhat make sense to do it.
This will sound like I'm joking, but I'm not. It seems like with this administration, having the regulators reverse their decision wouldn't be that hard, especially with a "donation" to the ballroom or something along those lines.
I don't think the UK is interested in a ballroom. The UK blocked that deal, not the US.
Nvidia is already doing that under MGX. They also offer their Grace CPUs on that platform.
The problem is not demand going away. No margin in a late stage company goes unassailed for long. Intel has nothing to lose. AMD has everything to gain. Untold other players are finding oxygen in various places. Nvidia is smart to use their spotlight as long as it lasts, but in their pitch, they're saying, "this will put you ahead," not "this will last forever."
> The problem is not demand going away.
The problem for Nvidia is when demand doesn't continue to increase as much as expected.
Unless they have managed to hide a lot of leverage and debt (not investment), that's a problem for their shareholders if they have priced in future growth.
To avoid looping this conversation for the next 2-3 years, we need to get to higher PEs to match the dot com bubble. It's just hard to have a long bubble that collapses without debt and leverage. You need something that compels the market to correct or else the long bubble just stays long. Suddenly I understand why shorting is essential in breaking the back of long bubbles and stabilizing market dynamics.
Google?
90% search is not 90% ad revenue. If you want to compete with Google, it's easier to make a different kind of popular platform and then sell ads than to compete head-to-head for traffic on search only to... sell ads.
Yes, but their moat is not unassailable. If/when the market for massive parallel computations becomes truly competitive, the combined market cap of all companies in it will likely be smaller than what NVidia currently has. NV margins are insane, and are only possible because they have an effective monopoly.
Perhaps not forever but GPUs for AI is likely to be a very solid and profitable business for a long time. CPUs made plenty of money for their makers in that era.
AI, while undeniably powerful and transformative, is in the midst of the biggest, most insane tech bubble we have ever seen. And nearly all of that money is ending up, directly or indirectly, in GPU data centers. And NVIDIA is the largest cost (profit maker) there.
When that investment firehouse gets turned off, the AI providers will stop building new data centers. Likely for some years. That revenue stream for NVIDIA will go to zero so fast…
The unknown, as with any bubble, is timing.
Demand for chips has only increased since their invention and never gone down, much less "to zero." Chips are a critical part of the tech business for the foreseeable future, regardless of what happens with AI or any other use case for them. They're raw material for computing, and computing use only goes up.
NVIDIA growth in data center sales the last 4 years: 2022: from $6.7 billion +58.5% to $10.61 billion; 2023: +41.4% to $15.01 billion; 2024: +216.7% to $47.53 billion; 2025: +142.4% to $115.19 billion
NVIDIA isn’t a startup. It isn’t disrupting a market. It is the ESTABLISHMENT. Low double-digit growth numbers for market leader in established industries would be, by itself tremendously remarkable. Apple was 6% last year, for example. That’s doing great.
NVIDIA grew 142% this year and 217% the year before. That’s… that’s f%#£ing unbelievable is what that is.
The entire consumer market for NVIDIA is less than 10% of their data center market. NVIDIA is a ln AI company with a side hustle in computer graphics. Oh and a nontrivial amount of that is researchers and small companies buying consumer chips for non-LLM AI training and inference, so real numbers are even smaller.
“Zero”, while not mathematically accurate, is indistinguishable here. Elimination of most of the data center sales would immediately move market valuations by trillions of dollars.
Demand for networking equipment has only increased since their invention and never gone down, much less "to zero".
I'm sure that same phrase was echoed at Nortel and more offices in the 90s.
It's all hot stuff until you have a few billion dollars worth of inventory manufactured that you can barely give away for a million dollars one day. Sure it's not zero, but you're still pretty fucked in the end.
NVIDIA doesn’t separate their networking revenue, but at time of acquisition mellanox had less than a billion dollars on sales. Less a half a percent of NVIDIA’s current data center sales. That has undoubtedly grown, but I would be surprised if the networking share of their data center business was more than a rounding error. Keep in mind they sell GPUs for $50k, 2-8GPUs per box, and even a state of the art Infiniband card to put in that machine is only a few thousand bucks.
You are missing his point.
I think I replied to the wrong comment, thank you.
Man, I feel old. I remember feeling this way during dot-com bubble. The few months of unemployment grounded me. Anyway, better positioned this time. History is a good teacher.
This time the bubble has companies firing tens of thousands of employees because they think AI has made then redundant. When the bubble popped the first time, the internet thing stuck around and was a permanent change, popping the bubble wasn't a return to the status quo. I wonder how it will work out this time.
Feeling which way? Demand for chips are much higher than it was at the peak of the dot-com bubble. That was a painful period, but only a blip in the history. Everything considered “hype” back then has become reality, at a scale that was beyond any dot-com era expectation.
> most insane tech bubble we have ever seen.
the current "bubble" hasn't surpassed the dot-com boom yet.
The total aggregate loss of value from top to bottom of the dotcom crash was about $5 trillion. That’s the current market cap of NVIDIA alone, to say nothing of other AI companies. So yeah, it has.
that number back in 2000 is about $9.7 trillion adjusted for inflation. You can't merely just compare the numbers at that time with a number today. It's meaningless.
You have to compare forward earnings to share-price ratios.
I think you missed that I'm comparing a single company to the entire market crash in 2000.
What about OpenAI, Anthropic, xAI and the other foundation labs that have collectively raised trillions?
What Microsoft, Amazon, Google, and Meta, which would likely survive but maybe lose up to a trillion each in valuation?
What about the very long tail of venture-backed AI companies that will go bust? You might complain that the dotcom number was just public companies, but back in 2000 everything was a public company. A company with thousands of high-earning employees going bust matters to the greater economy whether or not it is Nasdaq listed or not.
If a single company represents the entire dollar amount of the dotcom bust, or half when inflation-adjusted, and that valuation is entirely predicated on that growth continuing at historically unprecedented rates.. yeah we're in a bubble, and the damage when it bursts is going to be big.
That was the point I was making, and I fail to see how forward earnings to share-price ratios has any relevance here. The whole point of a bubble popping is that the market suddenly finds out those forward revenues were a mirage, a house of cards, and are very much made up.
> fail to see how forward earnings to share-price ratios has any relevance here.
the relevance is that these earnings expectations are lower than when the dotcom bubble happened.
The fact that a single company can have a market cap today that is greater than the losses from the dotcom bust is irrelevant. We have more wealth today than back in 2000, and these market caps reflect that.
>the relevance is that these earnings expectations are lower than when the dotcom bubble happened.
[citation needed]
cant find the forward earnings chart, but PE is close proximation
https://www.macrotrends.net/2577/sp-500-pe-ratio-price-to-ea...
The dotcom bubble peaked at around 46, while we are currently at 30. Will it grow? Who knows. But the bubble certainly isn't as big as claimed by the grandparent comment.
PE ratio spikes are a lagging indicator though. The spikes are after recessions.
Markets collapse, investments slow/stop, orders dry up, suddenly stocks must be valued on future hypothetical orders post-recession (same company, eventually the economy will turn and someone will buy), current PE values spike as current earnings become decoupled from stock price
You also can't just leave out the bond market.The dotcom bubble sat on top of the 10 year bond at 5%. The US had a balanced budget and 10X less debt than now. It was the peak of the unipolar moment. Part of the AI bubble is the lack of safe investments to act as a flight to safety. I just don't think they are really comparable. The AI bubble could certainly be more destructive given the circumstances and concentration when it pops, even if not bigger. The other main difference is we actually had the internet in place. So much of what is fueling the AI bubble doesn't even exist.
Maybe the most insane tech bubble you've seen. We'll have to wait and see how the superbowl goes.
AI is a bubble and will pop soon, theres no way even 80% of the spending has yielded the returns they were looking for. Nvidia cards will lower in demand though probably the bubble will be a net gain for nvidia over the preceding 4 or 5 years, though it will take them a while to regain their peak market cap
I’m not sure how you mean “… very-in-demand product, that is not likely to last forever…” is an analogue for a sovereign wealth fund, but there is also the issue of one interpretation of what you said very much providing an avenue for sustainability; that all the GPUs for all the AI systems are all going to burn up and/or become outdated in a mere 3-5 years, prompting repurchases.
I’m aware there are some efforts in play to offer alternatives to GPUs and compete with Nvidia, but I don’t see a path for how that actually happens in the near term with Nvidia's market dominance, short of revolutionary technological breakthrough or possibly even anti-trusting Nvidia.
I suspect what you mean is the circular business practices that we’ve been seeing, seemingly starting with Nvidia for some reason. Is that the aspect you are comparing to some sovereign wealth funds that through simply massive scale, they are capturing the whole lifetime cycle in some places and domains?
Im saying that Nvidia’s current monopoly isn’t going to last forever. The product space will (very likely) still exist, but in 10 years Nvidia may not be able to get the ~80% margins it currently does (due to competition, technological changes, etc).
When that happens, they’ll still have their fingers in all the pies.
It’s arguably a much better approach for Nvidia as a company.
Except usually sovereign wealth funds are for diversification, so oil rich nations will use their wealth fund to invest in non-oil linked commodities, since then if they're revenue dries up their investments shouldn't. Even better they can invest in this with an inverse correlation to oil such as green energy, so when their oil revenue dries up their investments go up.
Nvidia is not diversifying, but investing in it's customers, which are very very linked to it's own performance.
You’re definitely right, but I don’t think the risk here is that the industry goes away, or that there isn’t demand for the same set of products.
What I think is likely to go away is Nvidia’s monopoly in the space. When it does, Nvidia will still have pieces of all the major players.
Could this be a strategy to scare away overoptimistic stock buyers?
When you have a money printing machine that you don't expect to run forever (but aren't afraid of the future beyond, optimistic that you can still make money, just not that easy), as a publicly traded company you have the problem that eventually all owners who have similar expectations will have sold to more optimistic owners who expect nothing less than the money printing machine running forever. And getting even bigger while at it. When that ownership change has happened, the company does not really have any other option than to die trying. Deliberately diluting the value of the company with ownership in "definitely not a money printing machine!" before that happens could be a way to avoid that death march, a survival strategy.
They know their time is running out. CEO has been selling shares like they are going out of business the next monday, but nobody talks about it because market could wake up from the dream and crash the entire market as the AI bubble is the only thing holding up the entire USA economy(yes, not just the markets) right now.
https://fintel.io/n/huang-jen-hsun
>nobody talks about it
https://www.cnbc.com/2025/07/19/nvidia-ceo-jensen-huang-sell...
https://www.nasdaq.com/articles/jensen-huang-selling-nvidia-...
https://www.ft.com/content/36f346ad-c649-42ac-a6b6-1a8cc881e...
https://timesofindia.indiatimes.com/technology/tech-news/nvi...
Seems like he's sold 10% ish of his shares in 2025, not really that extreme
10% seems pretty high, running out of shares to sell of a company you own over the course of a decade? Definitely seems like you're hedging against a downturn.
10% is not a lot. Remember that the share price has gone up more than 50% in the past year. Assuming he wants to keep NVIDIA at a fixed percentage of his net worth, he would have to sell up to 33% of his shares (depending on the target percentage). Even after selling the dollar value of his remaining NVIDIA shares is still up $6 billion from a year ago ($8 billion to $14 billion).
Facebook too https://fintel.io/n/zuckerberg-mark
They know the market is going to crash soon-ish.
I'm not in the crash-soon camp.
It's just smart investing to take some profits at a historic high mark...
Which is not not smart.
edit: highlight: "not not". I think it's very smart.
Why is it not smart?
The classical answer would be RCA, who famously bought Carpetland, Banquet Foods, and Hertz car rental, and was bequeathed the moniker "Rugs, Chickens, and Automobiles" by the investment community.
Buying a stake in Nokia is admittedly different than taking it over and managing it, but the danger there is very clear. Distracted management that strays away from core competence can easily kill the golden goose driving revenue.
The contrarian view is that Berkshire Hathaway is able to hold an array of successful manufacturing and service businesses (Kirby vacuum cleaners, Dairy Queen, Clayton Homes, and the prominent Sees Candy) without losing management control of GEICO and their other insurance holdings.
Hopefully, Nvidia sees the example of RCA and Gulf Western, and will not lose focus on their core competence.
RCA famously birthed the semiconductor industry in Taiwan. I think that focused trade regulation would prevent a repeat of that event in modern times.
Edit: It appears that RCA bought Coronet Carpets, not Carpetland.
There were two nots
you calling nvidia dumb not smart
Feels more like they are taking a page of SoftBank vision fund thesis but repacking it for strategic investment.
When an organization reaches a certain level of wealth they become what amounts to as lawyers. Placing money in areas that demonstrate their understanding of the situation even if it may result in potential losses strengthens their brand and reputation.
I guess it’s better than just doing share buybacks?