I give you $100 cash and you give me $100 worth of stock in return. Now you give me $100 cash to buy something from me that cost me $80 to produce. I end up with $100 worth of stock in your company which cost me only $80. No?

NVIDIA gross margins lately are like 75%, so it's more like you give me $100 to buy something from me that cost me $25 to produce, hence I end up with $100 worth of stock in your company and it only cost me $25.

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ethbr1 2 hours ago | parent | next [-]

> hence I end up with $100 worth of stock in your company and it only cost me $25.

You also lost out on $75 worth of cash revenue (opportunity cost from selling the same thing to a different customer), so really you just took stock in lieu of cash.

It'd be different if Nvidia (TSMC) had excess production capacity, but afaik they're capped out.

So it's really just whether they'd be selling them to OpenAI and getting equity in return or selling to customers and getting cash in return.

If OpenAI thinks their own stock is valued above fundamentals, it's a no brainer to try and buy Nvidia hardware with stock.

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ben_w 3 hours ago | parent | prev | next [-]

> I give you $100 cash and you give me $100 worth of stock in return. Now you give me $100 cash to buy something from me that cost me $80 to produce. I end up with $100 worth of stock in your company which cost me only $80. No?

Sure, but how's that a cheat code? If you normally sell something for $100 that costs $80 to make, and then use that $100 revenue to buy $100 of stock, this is an identical outcome for you.

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danielheath 2 hours ago | parent [-]

They wouldn’t have bought $100 worth of product if the deal weren’t offered, because they didn’t have $100 to spend.

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ben_w 2 hours ago | parent [-]

If they couldn't borrow $100, or get $100 from any other investor, that just puts you in the position of being an investor, and even then the difference between bradfa's version and mine is simply when you became an investor, not that you became one.

Again, this is not a cheat code: if you sell $80 of cost for $100 of stock, the stock you now own can go up or down, and if you overvalued it then down is the more likely direction.

	▲	ethbr1 2 hours ago \| parent [-]
		The primary cheat code here would actually seem to be (a) getting preferential access to Nvidia's production through these deals and (b) creating a paper story of increasing OpenAI private valuation.

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Sleaker 3 hours ago | parent | prev [-]

Aaaannd get to claim the 100 as revenue to show investors that the company is performing better than if I had not made the deal, which also means that demand for the product stays inflated which also means I can keep my margins higher by not needing to discount my product.

	▲	rvnx 2 hours ago \| parent [-]
		Urgently need an IPO so losers can chip in. If the sandcastle plummets before, funds and other AI companies lose a lot, so better bet again and again, even if this is nonsensical.