Jensen Huang, the CEO of Nvidia, is central to the concept of “neoclouds,” according to industry expert Saari. He describes these neoclouds as extensions of Nvidia, which are currently unprofitable and reliant on debt for expansion. This raises questions about their financial sustainability.
These neoclouds may function as special purpose vehicles for Nvidia, intended primarily to drive sales rather than focus on the long-term viability of the companies involved. OpenAI, also an Nvidia investment, exemplifies this trend, as its plans for a significant data center expansion heavily depend on Nvidia hardware.
Some observers have drawn parallels between Nvidia’s approach and the tactics used by Enron, which historically involved high-risk special purpose vehicles to incur debt. While Enron engaged in fraudulent practices, Nvidia’s dealings with its partner companies, such as CoreWeave, are noted to be transparent. This transparency raises questions about the implications of such business strategies in the tech sector, which may resemble elements of a speculative scheme, akin to the GameStop trading situation.
Industry expert Luria criticized the behavior in these partnerships as unhealthy, although he acknowledged that it remains legal and visible to investors. Many investors appear to overlook the risks associated with this business model, prompting inquiries into the long-term consequences of such arrangements within the tech ecosystem.
Source: https://www.theverge.com/business/828047/nvidia-enron-conspiracy-accounting