AI Summary
5 min readInto the Jensenverse: The Circular Economy of AI
NVIDIA just reported another quarter of record earnings—$96 billion in revenue—but buried in the numbers is a strange and fragile picture. Sixteen percent of that revenue came from a single unnamed customer. For the first half of fiscal year 2027, 44% of NVIDIA's $177.8 billion came from just three customers. And 70% of its current accounts receivable—gear shipped but not yet paid for—is concentrated in five customers. To keep those customers buying, NVIDIA is offering payment terms ranging from 90 days to a full year for certain "investment grade" clients. The investment grade designation, it turns out, applies to companies like CoreWeave and Nebius—unprofitable neo-clouds that exist only to raise debt and buy GPUs, whose debt is rated investment grade because it's collateralized by contracts with companies that have good credit. The ratings agencies, once again, have apparently learned nothing.
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What you'll learn
- 1 Main Outline
- 2 (02:11) **The Jensenverse Dependency Crisis** - Ed Zitron introduces the central paradox: NVIDIA's record $96B quarterly revenue depends on a tiny number of customers, with 44% of $177.8B in first-half FY2027 revenue coming from just three clients.
- 3 (04:19) **NVIDIA's Investment Spree: Buying Its Own Customers** - NVIDIA spent $6B on AI company Bullside, hiring away most staff (founders say it's not an aqua-hire), and is rumored to invest billions in Perplexity at a $30B valuation.
- 4 (05:36) **The Full Portfolio of Dependencies** - NVIDIA is invested in Anthropic, OpenAI, CoreWeave, Nebius, Iron, EnScale, Intel, SpaceX, Reka, and Weka (two different companies).
- 5 (06:34) **Balance Sheet as a Service** - Morgan Stanley analysts describe NVIDIA as a "balance sheet as a service company" with over $366B in commitments, including $25B of data center leases yet to commence.
- 6 (07:25) **The Impossible Growth Target** - NVIDIA's CFO predicted 70% revenue growth in FY2028 (starting Feb 1, 2027), meaning over $674B next year based on consensus estimates of $396B for current fiscal year.
- 7 (08:38) **The Debt-Sustained Illusion** - The AI boom is only possible as long as debt sustains it: SoftBank took out tens of billions to fund OpenAI and now tries to sell $20B in bonds to refinance.
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Guests on this episode
Show Notes
In this week's Better Offline monologue, Ed Zitron runs through how the AI bubble has increasingly become Jensen Huang and NVIDIA feeding different companies money, and how NVIDIA’s revenue is mostly dependent on a small handful of customers being able to raise more and more debt every year.
EDITOR’s NOTE: I incorrectly say at the beginning of this that NVIDIA’s earnings were this week. They’re next week. Sorry!
Newsletter: The AI Hater’s Manifesto: https://www.wheresyoured.at/the-ai-haters-manifesto/
Bloomberg Article: https://finance.yahoo.com/technology/ai/articles/nvidia-500-billion-plan-envelops-164209178.html
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