Because higher stock value means more collateral for debt.
You’d be surprised on how much debt is used in even small companies.
Why would nvidia have new money to invest when its stock goes up? That’s not how the stock market works, you buy stock from other investors, not the company. Unless they finance all their investments with debt and use their higher valuation to get easier access to that financing. Which seems unlikely.
Don’t get me wrong, I 100% think AI is a crap bubble, but I don’t think you understood how this scam works.
Croquette@sh.itjust.works 20 hours ago
ctrl_alt_esc@lemmy.ml 20 hours ago
I’m aware, usually investments are not financed (primarily) with debt though.
Croquette@sh.itjust.works 10 hours ago
Having the capabilities to take on debt helps to garner investments.
You can do a joint venture, take on a bit of debt but get more money of it.
And we’ve seen many mega corpos finance their venture throught debt (see Uber business model).
So I’d say that it was true in the past, but corpos are getting bolder.
SaveTheTuaHawk@lemmy.ca 21 hours ago
Companies issue new stock to raise capital all the time.
ctrl_alt_esc@lemmy.ml 20 hours ago
Yea, except Nvidia didn’t.
phutatorius@lemmy.zip 21 hours ago
That’s not how the stock market works, you buy stock from other investors, not the company.
The company can issue more stock, not just use debt for its financing. And the value of the new stock is strongly influenced by the market price of the stock that has already been issued.
ctrl_alt_esc@lemmy.ml 20 hours ago
Nvidia’s outstanding shares have declined continuously since 2017.
trolololol@lemmy.world 1 day ago
NVIDIA sells GPUs to Oracle. Oracle sells GPU time to openai.
When time comes to pay the bills, openai doesn’t have the money to pay Oracle who then doesn’t have money to pay NVIDIA. So, Oracle gives stock to NVIDIA, and openai also gives stock to NVIDIA.
NVIDIA doesn’t care if both go broke because now a gpu is worth a lot more, and in the books they’re selling a lot more GPUs each for a lot more money. So NVIDIA stock goes through the roof even if they ran out of cash and got into ridiculous debt.
Shareholders have a ridiculous profit, NVIDIA directors get a massive bonus and NVIDIA CEO gets famous.
Tollana1234567@lemmy.today 1 hour ago
the power bill seems to be placed on customers of the electric companies
NotMyOldRedditName@lemmy.world 1 day ago
Wouldn’t NVIDA care? They now own part of the company in exchange for that hardware?
If they go bankrupt, nvidia loses their stake in a company, and it all falls apart.
OpenAI though, can only go on for as long as their venture capitalists are willing to support it.
I’m not convinced the LLM model can ever make an AGI, but it a can be useful and be made more useful. There could come a point where it’s usefulness and it’s short comings reach a profitable point that people will accept.
Peruvian_Skies@sh.itjust.works 13 hours ago
I think your question comes from thinking that anybody involved in this grift cares about anything other than short-term results. They would sell their own kidneys as long as they only had to deliver after the next quarterly earnings report.
Croquette@sh.itjust.works 20 hours ago
The point is that major shareholder will try to hide insider knowledge to sell their stock before a big crash.
They pump the stock value as much as possible and sell it before it crashes. They make a shit ton of money and some suckers are left holding the bag.
NotMyOldRedditName@lemmy.world 14 hours ago
Ah, yes those people definitely don’t care, they’ll make their money either way.