| >We don't know what the maximum is because some of the terms are confidential. So we agree on something: the $6.3B is not the cap: we don't actually know what the cap is. (And for the record, I never spoke confidently about the agreement, I spoke confidently about what was stated in the article.) The SLA you linked is the operating agreement that is effective once the revenue guarantee comes into effect, it is not the agreement that guarantees the revenue. Insolvency is a canard: the whole point, from CoreWeave's perspective, is that the guarantee helps insure that it won't go insolvent if demand doesn't materialize. It can essentially pass the loss back to Nvidia. That's also why you indicated that it makes the deal more attractive to third-party lenders, correct? >So have you quantified how much money Nvidia has to spend to generate a dollar of artificial demand? No, because the precise amount is irrelevant. What matters is that the chip demand is induced, not organic. >CoreWeave is publicly traded. Feel free to evaluate the financials and explain how the company is insolvent. I did not state that CoreWeave was insolvent. I was pointing out a flaw in your apparent belief that reported, GAAP-compliant revenue is unimpeachable. At least now, you're asking the right questions. >A smarter discussion would be around CoreWeave's leverage and what happens if the AI demand dries up. That is the discussion I have been trying to have. Nvidia's demand-goosing is only one piece of a much larger circular system. One way that demand would appear to dry up is that it was never as rapidly growing as these deals assume it is. Once everyone in the chain buys into an assumption of growth, it can become a self-fulfulling prophecy, at least until reality becomes unavoidable. Right now, the assumptions are not really about AI demand, they are about data center demand. That's where the money is being spent, and that's where the circularity is appearing. We are in a regime where companies are richly rewarded whenever they participate in a data center deal, because "everyone knows, AI is going to be huge." There is a good discussion of how this is happening in https://www.groundbrkr.com/p/the-second-derivative-why-no-on... (see section III, "the AI Boom is a Credit-Driven Real Estate Cycle"). The gist of the article is that actual AI demand doesn't have to "dry up" for the system to collapse, it only has to accelerate at a slower rate than the assumptions made to support the data center deals. >You haven't actually demonstrated that Nvidia has guaranteed CoreWeave a positive return on its investment. You're misreading the meaning of the term "investment" here; only the ROI on the GPU purchase is relevant with respect to Nvidia, not any pre-existing 3rd party debt. I'm not saying Nvidia is guaranteeing CoreWeave's net profit as a business, only the marginal ROI it expects from the chips. Which still means that it is incentivized to buy to whatever the limit is of the guarantee, independent of organic demand. And remember, real demand doesn't have to decline, it only has to slow its acceleration. Goosing demand as Nvidia has done is clearly risky in that environment. And it also raises the question, why they had to do it at all if demand is so robust? |