[abathologist]

Oh really? A 195% cost to revenue ratio isn't bad at all? I'm not a biz expert, but I spent a few minutes looking this up (e.g., what are usual cost-to-revenue ratios for new lines of business), and this sounds like BS to me.

[rdl]

If "cost" is mostly capital investments, absolutely. Normally you'd use operating cost (which for capital equipment would be depreciation and interest), and here they are using the capital cost as full cost.

No one really knows how quickly AI hardware investments will become obsolete and thus how long it should be amortized, but 2-3 years would be extremely conservative, and in fact used H100 (discontinued/2 generations old) prices are higher today than they were when the equipment was new several years ago.

[ch_fr]

But if it's fully being amortized, then it means they don't buy new Nvidia GPUs anymore for a while. The situation is either "your GPU AND the datacenter infrastructure it's running on is obsolete", or "Nvidia's profits tank because people are staying with current-level infrastructure".

[rdl]

That would be true if everyone weren't supply constrained and buying literally everything they can find.

There are actual risks that this trend doesn't continue, but as long as the trend continues, it is pretty good for revenue. "AI shown to hit a wall/doesn't actually deliver/stops growing so fast", "massive improvement in hw efficiency or tech such that all the old stuff becomes obsolete", "bottleneck on power/regulations/etc such that no one wants anything but the most efficient cutting edge stuff" would be the ways it could end and then all these factors reverse. Right now, power is so constrained that old, inefficient power generation is actively being turned back on or set up at new sites (e.g. old aviation turbines which are very inefficient compared to combined cycle).