In this case, the structure of the investment market for AI is picked apart. It is very weird. Neocloud is made up of startups with a voracious appetite for cash, but no investment grade status. Thus, Nvidia backstops them, guaranteeing to rent unsold capacity for a fixed price for long enough to guarantee enough revenue to attract other investment. Other cash-rich big tech companies do similar things. This backstopping, also known more wryly as “balance sheet as a service,” effectively shifts more risk to investment-rated companies. It’s an increasingly important capex enabler, but as SemiAnalysis says, it’s necessarily limited, especially if AI itself has blown a hole in the enterprise.

If it is a bubble than why is there is big loud noise and me trying to push a bunch of hot air onto you before I disappear into thin air???