No AI company that creates language models makes money. On the contrary, they have big losses, because AI is not yet profitable. The only one that has nothing in bills is Nvidiawhich almost monopolizes AI chips. But your business depends on AI companies not going under, so today it has invested 2,000 million dollars in Xai of Elon Musk.
A few days ago, Jensen Huang’s company invested 100 billion in OpenAI, and 5 billion in Intel. It is a circular economy where companies in the market help each other, waiting for the business to make profits.
Elon Musk and his company xAI have raised $20 billion in a participation round in which Nvidia has participated with 2,000 million, but also investment funds and other groups.
Nvidia will finance its own GPUs for xAI
If Jensen Huang’s company wants to sell its GPUs and xAI needs them, the logical thing is to pay an amount for them. But In the artificial intelligence business, nothing is paid directly with money. Among other things, because one of the parties usually does not have it.
We already saw it yesterday with the alliance between OpenAI and AMD, it is where Sam Altman’s company will build data centers with AMD hardware, in exchange for shares in Lisa Su’s company.
In Nvidia’s investment in OpenAI, data centers will be built with Nvidia hardware, which Jensen Huang’s own company will pay for, but only if center creation goals are met.
As revealed by the media Bloombergthis xAI financing round would be divided between around $7.5 billion in equity and up to $12.5 billion in debt.
With that money, Nvidia GPUs will be purchased for the Colossus 2 data center, the one that uses highly polluting natural gas turbines without permission. But xAI will not buy them directly. A «special purpose vehicle» is being created that will purchase the hardware and lease it to xAI for five years.
Investors hope that with the profits made in those five years, Nvidia’s GPUs will pay for themselves.
We are in a circular economy situation where AMD and Nvidia pay or invest in AI companies to use their chipshoping that the benefits will come. But the entire scaffolding is based on a single premise: that artificial intelligence succeeds.
For that reason they are shoving AI down our ears. If people do not use it, if users and companies do not pay for subscriptions and software, the bursting of the AI bubble will make any other economic crisis in history a child’s play.
Get to know how we work in NoticiasVE.
Tags: NVIDIA, Artificial intelligence, Industry, Elon Musk