More Tales From Nvidia: Is NVDA a Business or Stock? (Issue 201!)

Avatar photo Doug Kass on June 8, 2026

It’s very interesting.  

I suppose Nvidia ($NVDA) is not too different than Strategy’s Michael Saylor.  

Does Nvidia run a business, or a stock?  Is Jensen Huang a CEO or an equity market strategist and stock promoter?  

Jensen Huang is obviously brilliant.  He knows nearly the whole sector is a circular financing that has become too big for him to keep financing himself.  It is now moving from being dependent on privately funded circular financing deals and the nuttiness of the credit markets, to needing the amounts of capital that only the equity markets can provide.  Google ($GOOGL) and Meta ($META) have just implicitly told you that too, via their equity sales and theoretical planned equity sales. Open AI has told us it is even graver and more desperate than I suggest, because the company apparently is already back to begging the government again for money. 

At any rate if all of one significant down day in the equity markets is enough to spook the Nvidia CEO into full Saylor waving pom-poms mode, it shows you they all know how desperate the situation is and how dependent the scheme is for fresh capital inflows at greater scale from the public markets to keep the game going.  

The Nasdaq advances by +300% (and multiples are in unheard of territory) and then down 4% — and it is a “selloff” and a buying opportunity?

Positions: None.

Tales From Nvidia: AI Is Now More Expensive Than Human Labor (Issue #200!)

Avatar photo Doug Kass on June 8, 2026

Imagine a business that provided free humans to write code. Call that Business A.

Of course, every end customer would hire the free humans to write the code. They would review it is as productivity enhancing. Call these guys Business B.

Business A, if it had all of its losses funded (including by its suppliers), would grow like a weed, because the Business Bs would keep hiring the free humans. But, once Business A started charging a rate where they could make a profit on their humans, the Business Bs would stop hiring them and Business A would be out of business.

This is where AI is with respect to writing code. It may be OK at it (and even though it is better than it was, it is still not perfect and has issues and it’s mostly non-breakthrough production level code), but there are massive losses up and down the system to do it.

The provider (OpenAI, etc.) loses scads of money, their suppliers (the DC guys) lose tons of money. The only ones making money are the semiconductor guys, who also really do not make as much money as people think if you back out the cash they have to send out to fund all of their customers to keep the game going!  

What if accounting rules required Nvidia ($NVDA) to count investments in their own customers as a cost of goods (expenses) and to amortize them into their P&Ls, how much money would Nvidia really be making?

The cash flow statement shows a very different story than their earnings do. 

It is crazy what is being done — it is a way to move the discount off the P&L.

Anyway, the article below has it right.  The free human analogy I used is pretty much exactly what AI is:   

Position: None