AI Titans' Circular Deals Echo 1980s Savings-and-Loan Crisis
An opinion article in the South China Morning Post raises concerns about the long-term viability of the AI sector's swift expansion, likening the current 'circular deals' among major AI firms to the 'daisy chains' that led to the savings-and-loan crisis in the 1980s. According to PitchBook, Nvidia, a prominent AI chip manufacturer, is linked to over US$750 billion in AI investments, partnerships, and financing arrangements. Colette Kress, Nvidia's CFO, indicated that demand from AI labs supported by Nvidia will represent about 25% of the company’s revenue next year. Bank for International Settlements data reveals that AI investments have surged to 4.5 times their level from three years ago. The article questions how much of this growth is funded by the same entities profiting from it. Jensen Huang, Nvidia's CEO, unveiled the Vera Rubin AI data center platform and Rubin Ultra AI GPU architecture at a conference in San Jose, California, on March 16, and he disputes the notion that Nvidia's agreements are circular.
Key facts
- Nvidia is involved in more than US$750 billion worth of AI investments, financing deals, and partnerships, according to PitchBook.
- Demand from AI labs receiving Nvidia financial support will account for roughly a quarter of the company's business next year, as stated by CFO Colette Kress.
- AI investments are 4.5 times the level of three years ago, according to Bank for International Settlements data.
- Nvidia CEO Jensen Huang introduced Vera Rubin, a next-generation AI data centre platform, and Rubin Ultra, a next-generation AI GPU architecture, at a conference in San Jose, California, on March 16.
- Huang disagrees that Nvidia's deals are circular.
- The article draws parallels between AI 'circular deals' and the 'daisy chains' of the 1980s savings-and-loan crisis.
- The piece questions how much of the industry's growth is financed by the same companies benefiting from it.
- The article is an opinion piece published in the South China Morning Post.
Entities
Institutions
- Nvidia
- PitchBook
- Bank for International Settlements
- South China Morning Post
- OpenAI
- Corning
- IREN
- CNBC
- FactSet
- Wedbush Securities
Locations
- San Jose
- California
- United States
Sources
- SCMP Culture —
- Quartz —
- TechCrunch AI —