Rainer Fehrenbacher
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rainer.tech
Rainer Fehrenbacher
@rainer.tech
320 followers 800 following 220 posts
Career IT admin with progressive politics and a slight obsession with bicycles

Local news publisher with @langleyunion.ca

I prefer Mastodon to Bluesky yet here we are 🫂

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Reposted by Rainer Fehrenbacher
edzitron.com
It no longer makes sense to buy NVIDIA's AI GPUs. The space and power doesn't exist to turn them on, providing AI compute and LLM services is deeply unprofitable with no end in sight, and demand for these services simply doesn't exist at scale. It's time to stop.
www.wheresyoured.at/nvidia-isnt-...
Why Is Anybody Still Buying GPUs? This Is All Insane! AI bulls will tell you about the “insatiable demand for AI” and that these massive amounts of orders are proof of something or rather, and you know what, I’ll give them that — people sure are buying a lot of NVIDIA GPUs! I just don’t know why. Nobody has made a profit from AI, and those making revenue aren’t really making much. For example, my reporting on OpenAI from a few weeks ago suggests that the company only made $4.329 billion in revenue through the end of September, extrapolated from the 20% revenue share that Microsoft receives from the company. As some people have argued with the figures, claiming they are either A) delayed or B) not inclusive of the revenue that OpenAI is paid from Microsoft as part of Bing’s AI integration and sales of OpenAI’s models via Microsoft Azure, I wanted to be clear of two things: This is accrual accounting, meaning that these numbers are revenue booked in the quarter I reported them. Any comments about quarter-long delays in payments are incorrect. Microsoft’s revenue share payments to OpenAI are pathetic — totalling, based on documents reviewed by this publication, $69.1 million in CY (calendar year) Q3 2025. In the same period, it spent $8.67 billion on inference (the process in which an LLM creates an output). This is the biggest company in the generative AI space, with 800 million weekly active users and the mandate of heaven in the eyes of the media. Anthropic, its largest competitor, alleges it will make $833 million in revenue in December 2025, and based on my estimates will end up having $5 billion in revenue by end of year. Based on my reporting from October, Anthropic spent $2.66 billion on Amazon Web Services through the end of September, meaning that it (based on my own analysis of reported revenues) spent 104% of its $2.55 billion in revenue up until that point just on AWS, and likely spent just as much on Google Cloud. While everybody wants to tell the story of Anthropic’s “efficiency” and “only burning $2.8 billion this year,” one has to ask why a company that is allegedly “reducing costs” had to raise $13 billion in September 2025 after raising $3.5 billion in March 2025, and after raising $4 billion in November 2024? Am I really meant to read stories about Anthropic hitting break even in 2028 with a straight face? Especially as other stories say Anthropic will be cash flow positive “as soon as 2027.” These are the two largest companies in the generative AI space, and by extension the two largest consumers of GPU compute. Both companies burn billions of dollars, and require an infinite amount of venture capital to keep alive at a time when the Saudi Public Investment Fund is struggling and the US venture capital system is set to run out of cash in the next year and a half. The two largest sources of actual revenue for selling AI compute are subsidized by venture capital and debt. What happens if these sources dry up? And, in all seriousness, who else is buying AI compute? What are they doing with it? Hyperscalers (other than Microsoft, which chose to stop reporting its AI revenue back in January, when it claimed a $13 billion, or about $1 billion a month, in revenue) don’t disclose anything about their AI revenue, which in turn means we have no real idea about how much real, actual money is coming in to justify these GPUs. CoreWeave made $1.36 billion in revenue (and lost $110 million doing so) in its last quarter — and if that’s indicative of the kind of actual, real demand for AI compute, I think it’s time to start panicking about whether all of this was for nothing. CoreWeave has a backlog of over $50 billion in compute, but $22 billion of that is OpenAI (a company that burns billions of dollars a year and lives on venture subsidies), $14 billion of that is Meta (which has yet to work out how to make any kind of real money from generative AI, and no, its “generative AI … Also, I also forgot to mention that CoreWeave’s backlog problem stems from data center construction delays. That and CoreWeave has $14 billion in debt mostly from buying GPUs, which it was able to raise by using GPUs as collateral and that it had contracts from customers willing to pay it, such as NVIDIA, which is also selling it the GPUs. So, just to be abundantly clear: CoreWeave has bought all those GPUs to rent to OpenAI, Microsoft (for OpenAI), Meta, Google (OpenAI), and NVIDIA, which is the company that benefits from CoreWeave’s continued ability to buy GPUs. Otherwise, where’s the fucking business, exactly? Who are the customers? Who are the people renting these GPUs, and for what purpose are they being rented? How much money is renting those GPUs? You can sit and waffle on about the supposedly glorious “AI revolution” all you want, but where’s the money, exactly? And why, exactly, are we buying more GPUs? What are they doing? To whom are they being rented? For what purpose? And why isn’t it creating the kind of revenue that is actually worth sharing? Is it because the revenue sucks? Is it because it’s unprofitable to provide it? And why, at this point in history, do we not know? Hundreds of billions of dollars that have made NVIDIA the biggest company on the stock market and we still do not know why people are buying these fucking things.
December 8, 2025 at 5:42 PM
rainer.tech
Damn, sure seems to help out when your authoritarian leader is explicitly open to bribes.
December 5, 2025 at 7:52 PM
Reposted by Rainer Fehrenbacher
dwoboyle.com
Financialization is as antithetical to society as fascism and needs to be expunged and resisted from every angle possible.
December 3, 2025 at 8:09 PM