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Ed, reading thru seems to imply that Nvidia is simultaneously selling chips before they're made and also "warehousing" (by whom?) brand new, unopened GPUs. Aside from the fact that these two narratives directly contradict each other, wouldn't those have to show up somewhere on the balance sheet?

12/5/26, 10:27 pm0 reposts18 likes

bc it seems to me the real issue remains that: nvda is using its piles of cash and large equity base to fund startups and other tech firms to buy more GPUs for projects that have little hope of capital returns, and the market puts an irrational multiple on the forward backlog

This, of course, is not sustainable if the firms they're investing in don't turn a profit (which is likely!) but the market already knows this and just doesn't care yet

King V

@mrsaver.bsky.social

I’m not saying it is or isn’t either way, but i can imagine ways in which they recognize the revenue without fully “delivering them”. Tesla has used some kind of BS “financially delivered” standard for some time now.

ckfinite.bsky.social

@ckfinite.bsky.social

I'm able to track the warehousing claim but don't quite see the selling unmade chips, besides the preorder campaign statement. I can't speak to what Ed thought, but the implication is that (if Nvidia sold them but that they couldn't be installed they'd be capital assets on the purchasers' books?

I think we've def seen examples of proactive purchases that will be accepted prior to data center startup but that's normal/expected given stated demand from customers. If the chips don't have a path to get plugged in then this is channel stuffing and will fall apart in no time

ckfinite.bsky.social

@ckfinite.bsky.social

Mmm, makes sense. I think that channel stuffing is the broader idea, though the term that the article uses ("bill-and-hold") seems like a very specific form where NVDA warehouses the asset after sale to the customer. I don't see much evidence that this specific "bill-and-hold" concept is being used?

Yeah he links to another blog but not sure. I think the problem is granularity because for a company of this size, some of both behaviors will happen. They have 200+ bln in sales, some customers will not plug in chips til later some will pay before delivery! It's meaningless unless it's at scale

ckfinite.bsky.social

@ckfinite.bsky.social

It seems like "bill-and-hold" is an overspecialized claim; from the outside, the asset would seem to pass from NVDA's books to the customer's and then we'd have functionally no visibility into who physically had possession of the GPUs because storing GPUs is much easier than turning them on is?

King V

@mrsaver.bsky.social

I am able to imagine a scenario where both the buyer and seller want to make it appear like the sale was completely finalized so that Nvidia can recognize the revenue, and the purchaser can look like they are “hyperscaling” even though they don’t necessarily have a place to install them at present

I mean if it's happening on both ends at scale that's (1) almost entirely unprecedented and (2) sure to blow up very very quickly

the cash flows would rapidly diverge from the income statement if there wasn't a bunch of outside money flowing in and we simply don't see that happening yet

King V

@mrsaver.bsky.social