Should Investors Award Points To Circuitous Deals?
A few weeks ago NVIDIA (NVDA) issued a press release about it LOI with OpenAI in which NVIDIA would invest up to $100 billion in OpenAI over a period of time. A few days later, OpenAI announced a loose deal in which it would purchase approximately $100 billion of AMD’s chips over a period of time. NVDA is subsidizing its largest customer to keep the AI bubble going while also subsidizing a competitor to keep the FTC at bay.
Today, NVIDIA and Microsoft (MSFT) announced a deal to invest in Anthropic. Microsoft of course embeds Anthropic’s models in its offerings and Anthropic of course builds those models with NVIDIA chips.
Neither OpenAI nor Anthropic would be alive today were it not for these lifelines from its well-funded partners. When you think about it, the LLM business is not a great business. LLM companies are always building “the next model”, current models are never profitable, in fact, they lose tens of billions of Dollars, and older models never really find a second life. Older models ought to be open-sourced so that “aftermarket” developers can exercise their creativity and make something useful of those discarded models. What would happen if the older versions of GPT, Claude and Gemini were knitted together?