This looks just like financial engineering / creative accounting; to comply with things like GAAP rules and appearing less capex heavy, while functionally having the same effect.

In the end, Amazon is still going to be the ones leasing and hence using the chips; nominally the 'owner' changes hands, and it looks like a bond (with a small equity component) in just about every way, except through some legal and accounting magic, it doesn't go on their balance sheet.

For the sake of RAM prices I wish you were correct, but I doubt it. Amazon is more likely just making some cash in a very rational way.

We could have Selena Gomez explain to us how the rules that were put in place to stop the degenerate big-bank side-bets last time (ESLR) were repealed right before the next time (April 2026). She's only 34, so she'll probably be around for the next few cycles of this, too.

Such a pity, Amazon has to throw away unwanted chips here while there are so many starving AI labs in China!

https://www.tomshardware.com/tech-industry/artificial-intell...

They vibe-coded an asset class using the same chips they’re leasing back to themselves. This is the new dogfooding.

We’ll actually have AI Anthony Bourdain doing it.

Any moment now, guys, seriously, this time for realsies!

So how many puts did you buy?

Is all this a tax evading thing? so you move all those assets to the other company, the datacenter that is installed on a place that gives them a lot of tax advantages because "it will create thousands of work positions" gets then to be assigned to a shell company that declares the whole thing experimental and gets a lot of tax benefits that may result in "tax returns" paid from taxes from the people? LOL

how many dips are there in that scheme?

https://archive.is/Bswg2

CPUs are cheap. No one is buying them because the RAM to go along with them is so expensive.

It shouldn't be this way, but DDR4 is perfectly fine and will last for years. RAM generally has low failure rates; and prices are relatively better on the used market. If you want ECC, many used DDR4 ECC sticks seem like a 'relative bargain' compared to how much DDR5 ECC goes for.

As for GPU, AMD hasn't raised prices by as much; and honestly my 3060 12GB from many, many years ago plays absolutely every single game I want to play at 1440p; with nice visuals. Yeah, I can't pump everything to ultra, and maybe I need some DLSS for the most demanding games, but it's far cry from "old" or "obsolete".

In terms of actual experience or enjoyment I get from video games, I'm not missing out on anything.

It's legitimate to feel disappointed and upset at the current state of the PC market, but slightly older desktop hardware is still more than plenty fast enough.

I own both a MBP M5 Pro 48GB, and a MacBook Neo, and I use my Neo probably 2x as much as my MBP.

Because you’re poor?

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.

There is no consensus on AI chips lifespan as far as I’m aware

Not entirely automatic it would seem to me, my GPU I bought last year is today worth double what I paid for it.

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.

Everything is a depreciating asset, even cash.

And this lease agreement is perpetual right? Amazon can't just go and get a different set of hardware themselves or get another set of ignorant investors to buy the new hardware and leave these investors holding the bag?

That lease agreement is hold up more hope than god here my guy.

Indeed, the stock market never ingests news to make decisions

I would compare it to reselling mortgage bundles before 2008 crash. It is about moving risks to those who are more comfortable with it. Not a great sign but doesn't really indicate that sky is going to fall any time soon.

Sounds like a ponzi type scheme to me. The will "sell" installed existing chips to investors and then lease them back. So when the chips are obsolete or replaced, what will happen to the investment ?

Sounds very shady to me. But also sounds like what companies do with real estate, except land does not get obsoleted.

You’re grasping at straws with this - your unsubstantiated claims are worse than the doomers

Looks like a sale-leaseback. Similar in spirit to an asset-backed loan.

> So Amazon bought a bunch of nVidia hardware, and has been installing it in their datacenters. These are supposedly in-service for Amazon customers, a lot of it available and in-use today.

Bought, yes. Installed and in use? We don't know, but probably on a warehouse waiting for a place to be installed, for an energy source to be build.

Put the GPUs in another business, sell it to investors, and watch it unfold.

> why would you do a cash-out refinancing at a time of high interest rates?

If future interest rates are much worse much more quickly, it can be profitable.

IE: get a bunch of cash today locked at 10%, then lend out the money next year at 20%.

I dunno if that's the plan but there's so many possibilities in finance that it's hard to get what someone else is thinking even if their moves are public.

My guess is if AI hardware values crash then the new company can just go bankrupt.

What they gain is financial insulation. The SPV owns the hardware. It doesn't even own the physical building. These companies have managed to raise debt secured only by the GPUs. So, if/when this all goes south, the investors can only make a claim against the GPUs. Not the physical building and certainly not Amazon itself. That's what's going on here.

This is also why SPVs are off balance sheet because they aren't really a liability to Amazon (or Google or Microsoft).

The shocking part is that investors are taking on this risk to buy GPUs that depreciate wildly and fail at an annual rate of (supposedly) ~9% for a 7-8% return.

Did you notice anything about their quant?

If you've got a pile of money in your house sitting around, why would you do a cash-out refinancing at a time of high interest rates?

Maybe the rates to do leasebacks on physical items are better, than rates for loans to build datacenters?

Could be leasing has large tax(deductible) advantages too.

Also interest rates aren't high, they're still low taken over historical trends. Thos may mean that tax deductions, written decades ago, do well still via leasing vs depreciating the hardware.

I’m not a finance bro, but my read is that Amazon wants to focus more on *using* GPUs and focus less on finding financing for buying GPUs.

They’re trying to convert GPUs into an investable commodity asset, just like crude oil is, for example.

Rough analogy: You have oil producers (Nvidia), refineries (AWS) and end-users (all software that uses AI).