Nvidia invested $2b into CoreWeave for 9% equity stake. CoreWeave is spending $35b in CapEx in 2026. Therefore, Nvidia's investment is only 5.7% of CoreWeave's single year CapEx. The other $32b is coming from other sources that isn't Nvidia. This is hardly circular.

Nvidia invests in Neoclouds because it's a hedge against hyperscalers having too much power, ie designing and prioritizing their own chips, and not fully using Nvidia's rack design. Neoclouds give hyperscalers competition. Neoclouds accept Nvidia investments because it allows them to secure Nvidia chips first, which is a competitive advantage since new Nvidia chips have been as much as ~5-20x more efficient than old Nvidia chips.

Nvidia was planning to directly compete against hyperscalers through DGX Cloud. They cancelled public DGX Cloud access when they found that investing in Neoclouds would accomplish the same goals without having to compete against their biggest customers.

If you're Nvidia, it's smart because Neoclouds that you have a large stake in will deploy your full stack from GPUs to networking to storage racks. They will share valuable usage data back to you so you can design a better next generation. Hyperscalers are likely a lot less cooperative, prefer to use their own designs if possible, and will guard their usage data.

One aspect of the profitability might be the utilization and the pricing a few years down the line for slightly older hardware. Already now it seems like the increased processing you get from newer devices versus the cost difference makes something like an H100 or even A100 significantly less desirable than newer more powerful ones. As an individual, I am happy to be able to get an H200 on demand, but the B200 or B300 can do so much more work with optimized software and models for only modestly more cost that if those become available then from a business perspective you really have to prefer that if you can keep it occupied.

Then with Vera Rubin being like 3 times more effective or whatever, that adds a new layer of gradual obsolescence. So the question is can they keep the pricing up on the older ones a few years down the line enough to fill out the end of those expected payback periods.

The real boogeyman for a neocloud that has heavily invested in expensive Nvidia hardware might be a variation of that beyond Nvidia with startups that have even more dramatic efficiency increases pushing the leading edge even further. For example, if companies like Mythic AI and d-Matrix could somehow rapidly rapidly scale, that would push prices down for all of Nvidia hardware that is significantly less efficient.

I guess so far it doesn't look like any startups with really big efficiency breakthroughs are even close to being able to scale like Nvidia though, especially with the manufacturing and power crunch. But I suspect some of that is because of favoritism and strong arming protecting investments rather than a free and fair ecosystem.

CoreWeave feels very YC-ish. I thought I had an in as a referral for a position there and got interviewed by someone who knew a lot of my peers where I worked. Dude seemed to ask very textbook style questions that you would only learn if you went to a school system for this particular position/subject. I guess I didn't answer to their satisfaction despite knowing more than them on almost everything else. I suppose I'm still bitter seeing as I interviewed with them three times for two different roles. Absolutely wild.

/s because Poe's law is increasingly inescapable

That puts a cap on surplus (potentially unused?) datacenter capacity that's around by the time the AI bubble pops.

Financing is circular because creating a liability for one party (debt) creates an asset for another (the bank) off of which more debt can be secured

A bank / financier sells trust and reassurance. They otherwise invent most money from thin air.