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Nvidia insists it isn’t Enron, but its AI deals are testing investor faith
(www.theguardian.com)
OpenAI is more like Enron that NVidia I would assume.
this post was submitted on 30 Dec 2025
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A second order Enron you say?
Nvidia definitely isn't Enron. It's all of Nvidia's customers that are mini-Enrons.
Enron crashed because they were cooking their books and faking income, declaring potential profit where none existed.
That's not Nvidia. Nvidia is selling actual product as fast as they can make it at whatever price they want to charge.
Nvidia's customers, on the other hand, are the ones who have to justify buying billions of dollars of product from Nvidia and explaining how they plan to make a profit from that.
It depends on the customer. Microsoft, Google, Amazon all have the revenue to carry the debts they are taking on. Oracle, Chat GPT, Musk and others are waay more sketchy.
The build out is going to take billions of dollars and these companies aren’t going to see a return for at least 5 years or more. The majors can carry that kind of debt load long term even if AI doesn’t pan out. Other businesses will struggle or go under if AI doesn’t bring the returns.
The next major movers will be companies that do a lot of IT business consulting like IBM. They are going to be busy helping non IT focused firms incorporate AI into their business model.
Finally if all these data centers pan out and the US keeps oscillating between shunning Renewables or Fossil fuels every time a new party comes to office we are going to have major problems with our energy infrastructure. Think energy bills as high as your mortgage within the next 5 years. Invest in utilities or energy companies and try to put solar and some kind of storage on your home.
Enron crashed because they were cooking their books and faking income, declaring potential profit where none existed
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Sell chips to X
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Receive stock in X
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Value of stocks = discounted sum of future (fake) income
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Booked as an asset on the balance sheet
This is exactly like Enron but the underlying commodity isn't energy, it's compute.
Nvidia sells plenty of GPUs for actual money, they are good for it.
No, the real issue is the depreciation for the people owning GPUs. Your GPU will be usable for 4-6 years, and 2-4 of those years will be spent as ”the cheap old GPU. After that time, you need new GPUs. (And as the models are larger by then, you need moahr GPU)
How the actual fuck do these people expect to get any ROI on that scale with those timeframes? With training, maybe the trained model can be an asset (lol), but for inference there are basically no residual benefits.
And the companies faking revenue instead of profit.
NVIDIA is producing and delivering GPUs. However this does NOT translate into income, and that's what's making it shady. These companies are paying in shares that will be worth nothing when it pops.
It's all of Nvidia's customers that are mini-Enrons.
I don't think that those are faking profit. Well, I don't have some comprehensive list, and maybe somewhere someone is, but not for the majority of purchases. It's possible that they won't wind up being long-term profitable, but there isn't fraud involved in that.
I don't think that the Enron analogy is very applicable in general. Like, what people who are critical of the extent of AI investment are worried about is analogous to the dot-com bubble, where the returns to investors from companies didn't warrant the level of investment and stock prices for many companies shot way up and then fell back down.
EDIT: It's fair to say that Nvidia is driving demand for its products. But..that may be quite sensible, since if you have a killer app or two explode, it can drive massive demand for the hardware that runs it. If you have capital available and control the best hardware out there, it may well make more sense to use that capital on building more demand for your product than to go and try and improve the product more. There's only so many chip engineers available that Nvidia can hire, and unless they want to get into the "writing AI software" game themselves, which would have them compete with their customers, I'd think that that's potentially a reasonable place to put their capital if they're trying to improve their business potential.
Nvidia sold a lot of hardware when cryptocurrency became popular. I think that it's probably fairly safe to say that AI applications have considerably more potential to provide utility than does cryptocurrency.
NVIDIA is not Enron but they will definitely ~~loose~~ lose a great deal when the AI bubble pops.
LOSE
No idea if that was autocorrect or stupidity.
Nvidia has aggressively rebutted suggestions of any similarity [to failed telecom Lucent], saying in a leaked recent memo that it “does not rely on vendor financing arrangements to grow revenue”.
...Saying in a memo that was suspiciously, conveniently leaked and just so happens to claim everything is fine
This is more MCI Worldcom than Enron.
If you have to protest the insinuation as the CEO of a company in a public forum...Then I think the accusation has already found enough root to at least contain more than a grain of truth. The phrase "He doth protest too much" comes to mind.
That's such an Enron thing to say.
I bet Enron also claimed it wasn't Enron.
Enron was cooking the books hiding huge deficits, and spending the money from the workers pension funds, so no Nvidia isn't Enron, but that doesn't mean it's all good.
Enron was the absolute worst, only matched by the Bernie Madoff pyramid scheme and the Bankman Fried crypto fraud.
Saying you are better than that is a very bad look.
Joke aside, that's kind of the vibe it gives off.
You can't steal from employee pensions if you don't offer a pension
Especially since they made the comparison on their own! Relevant article: https://www.wheresyoured.at/nvidia-isnt-enron-so-what-is-it/
The SP500 is starting to look like NVIDIA -> companies NVIDIA is investing in -> everyone else. Its starting to get NVIDIA heavy. If they go down...SP500 is gong to look terrible.
It's a bad position to be in. If they crash it will be bad, but if they keep growing and then crash it could be worse.
Perfect place to be in to get a bailout. Nothing better than to pump it to the max and try and make it some one else's problem
America is about to learn the lesson Nortel taught Canada.
You can do everything right and still have the curse of investor overconfidence placed on you.
Huang has been complaining for some time that doing well doesn’t result in stock gains, but the actual problem is the stock price is way too high so doing well does nothing for investor expectations.
This is when you sell shares because they no longer have any upside potential.
It sucks for companies though, but the fact is nvidia is overvalued at a 4.5T market cap.
In some ways the victim of their own success, that's just the way this system is built, for better or worse (mostly worse). The incentives drive the behaviour, but the architecture is hostile in nature, so it's hard to have different outcomes at a certain level. Infinite growth is literal cancer.
“We didn’t want to inflate our valuation with circular investings, the market made us do it! We are the victims here!!”
*Deploys golden parachute*
he's got nothing to worry about. when they crash down to $1, trump will call it a "matter of national security" or some shit, and then bail them out, courtesy of your tax dollars and my tax dollars. because they actually want the AIs for their police state surveillance
The company doesn't care if the stock price hits $1. If the company is paying it's bills, it just continues. It's the people who hold shares that care. The company doesn't hold shares in itself.
Enron collapsed because the company financials collapsed, not because the stock price collapsed. That happened after all the bad accounting practises and hidden debt came to light. Now, in that case the shareholders succeeded in suing for their losses, but they only had a case because of the mismanagement.
The company absolutely does own shares of itself and it's ability to secure credit and just engage in business in general depends of the value of that holding.
No. The board can decide to issue more shares, but this is a sub-dividing of the already issued shares and so normally requires a vote from the shareholders. Major shareholders normally sit on the board, so the two groups overlap but are legally distinct.
If a company buys it own shares, it's normally a "buyback" and the shares cease to exist.
It does impact employee morale when they get paid with stock incentives and they go to zero.
Of course. They are shareholders.
The company is a separate legal entity though.
You can't really bail out a stock price though...
I guess you could provide a guaranteed backstop to sellers and funnel the stock to the government, as Trump seems to love doing, but then you end up with a $3T of over-valued assets that you can't do anything with.
Never trust someone who wears a leather jacket.
Who's seeing this person with positive vibes?
I would say, “never trust a CEO who wears a leather jacket.”
I’ve know plenty of bikers, punks, artists, etc that wear a leather jacket. But, a CEO in one stinks of, “hello there, fellow plebs.”
I don't know if it's just me or maybe dude is just getting older or photographers prioritizing different things, but I kinda love recent pictures of Jensen Huang.
Lately, I feel like whenever he is talking to anyone he always has this face that makes it seem like he's wondering if whoever he's talking to is going to finally be able to convince the world that all of this is falling apart and he's wondering "Is this where this train finally goes off the rails?".
This guy will happily sell your soul. I don't trust a word he says.
Well, "Thou shalt not create a machine to counterfeit the human mind" was pretty clear in the 1960s but what do I know?
Narrator: it was Enron
The bigger they are, the harder they fall.
They’re right in the sense that it isn’t Enron; they’re gonna make it way worse.
I'm curious. Economically speaking, what would happen if Nvidia pulled a "Steam" and had a "February sale" where some models of video card were discounted enough to lead to a massive spike in sales numbers? A big enough discount to generate a greater total net return on sales for the quarter despite the fact that they were sold at a lower profit margin per individual sale? Assuming limitations like "you must create an account with a residential shipping address that can receive no more than x cards at the discounted price per street address" or some such to limit scalping, would simply showing increased profits do them any good?
Or is the problem due to a lack of product quantity?
Steam can do massive numbers spikes because they have essentially infinite inventory. The whole reason scalping video cards works is that Nvidia can not make as many as people want, even at full retail price. The existence of scalpers implies that Nvidia could raise prices, sell slightly fewer units at higher margin and get greater total return.
Which is why their latest generation of cards costs almost a thousand dollars or more.