Thread

Amazon seeks to offload $8B of Nvidia chips to investors

80 points · 92 comments · wslh

sourdecor · 1790953337 · focus · HN ↗
Chips are automatically a depreciating asset - is there a historical basis for understanding how that affects companies, and how that will affect GPU-centric companies?
1. [deleted] · 1790953678 · focus · HN ↗
  [deleted]
2. ajross · 1790953973 · focus · HN ↗
  Chip assets are a vanishingly small fraction of the valuation of these companies. If they were to depreciate instantly and need to be replaced at cost every year (assuming the fabs had capacity to produce them) it wouldn't move the needle.
  This is like asking if there's a historical basis for understanding how the depreciation of garden sprinklers affects home value appreciation.
  1. sourdecor · 1790954295 · focus · HN ↗
    Then how do you explain the capitalization of nVidia?
    boredatoms · 1790955903 · focus · HN ↗
    Nvidia isnt playing buy/hold on these chips, but make/sell
3. embedding-shape · 1790953989 · focus · HN ↗
  Not entirely automatic it would seem to me, my GPU I bought last year is today worth double what I paid for it.
4. asdfsa32 · 1790954024 · focus · HN ↗
  Everything is a depreciating asset, even cash.
  1. howunfortunate · 1790954365 · focus · HN ↗
    The Anglosphere: Nuh-uh! Not houses when you take in a constant stream of new people and refuse to ever ever build anything new!
    dgellow · 1790954787 · focus · HN ↗
    It’s also happening everywhere in Western Europe fwiw
    nradov · 1790955640 · focus · HN ↗
    Houses depreciate without frequent and expensive maintenance. It's the land underneath the house that appreciates. In HCOL areas, wealthy people frequently buy residential real estate expecting to tear down the existing house and build a new one.
    (There are some limited circumstances where a house can appreciate due to permitting constraints or rapid rises in construction costs, but those are rare and temporary.)
    howunfortunate · 1790955853 · focus · HN ↗
    That's a good point and I agree.
    But zoning hell can sometimes make it apply to the housing itself too! For example, where I used to live, tons of housing was marked as "historic" and you literally couldn't tear it down or significantly amend it.
  2. [deleted] · 1790954466 · focus · HN ↗
    [deleted]
  3. sourdecor · 1790954471 · focus · HN ↗
    'Everything is a depreciating asset' is a fair statement - but things depreciate at exponentially different levels. A lot of things can be bought today which can be used for the same purpose just as efficiently in 10 years - and there are those which do not meet that criteria.
5. dgellow · 1790954546 · focus · HN ↗
  There is no consensus on AI chips lifespan as far as I’m aware
  1. nradov · 1790955381 · focus · HN ↗
    There's a pretty broad consensus that useful lifespan is only a few years, certainly no more than 7 and probably less. As each new generation of chips becomes more energy efficient at some point it's no longer economically viable to continue operating the previous generation even if they're still functional.
    cayleyh · 1790956841 · focus · HN ↗
    And also just the flat hardware failure rate.
    Not a lot of public data about things like that at scale, but there are some things like the Meta Llama report that had ~ 9% annualized gpu failure rate while training Llama 3. Not 100% clear from the Meta report if those are dead hardware or just 'unhappy' because they just put them into the 'interruption caused by' bucket.
    Would be interested if anyone had better data on actual live failure rates of h100 or better class gpu that suck so much power.
    <a href="https://ai.meta.com/research/publications/the-llama-3-herd-of-models/" rel="nofollow">https://ai.meta.com/research/publications/the-llama-3-herd-o... <a href="https://www.trendforce.com/news/2024/10/31/news-datacenter-gpus-may-have-an-astonishingly-short-lifespan-of-only-1-to-3-years/" rel="nofollow">https://www.trendforce.com/news/2024/10/31/news-datacenter-g...
6. lossolo · 1790961109 · focus · HN ↗
  Nvidia A100 80 GB was released in 2020 so 6 years ago. Cost for new was $15,000, you can buy used now for $15,000–$25,000.
  1. sifar · 1790967714 · focus · HN ↗
    used cars also appreciated in value during the covid supply chain crisis.
    The point is it is temporary and long term they are still a depreciating asset.

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