Nvidia in talks to acquire US 'open' model startup Reflection AI
ft.com74 points by arkj 3 hours ago
74 points by arkj 3 hours ago
Didn't they just recently invest in them? Curious about their strategy, considering NVIDIA already does Nemotron and i think diffusion models as well.
Yes, NV took $800M of a $2B round in Reflection.ai.
NV's long-term strategic incentive in funding a semi-open model provider like Reflection.ai is to ensure competitive frontier models which fully leverage the NV proprietary stack (chips, interconnects, servers, CUDA) continue to be widely available and continue to offer performance worth a higher price to the most profitable customer classes.
NV's ~75% margins on hardware(!) at >$100B/yr scale are historically unprecedented and still increasing, creating tectonic pressure on NV's largest customers (hyperscalers and frontier labs) to escape the "NV Tax" by gaining access to competitive frontier chips, servers, and/or middleware at lower margins. As Jeff Bezos famously said, "Your margin is my opportunity" and that's turning NV's biggest, best customers into their largest existential threat.
At the moment, NV's moats to significant competition are almost unimaginably deep, but on a decadal time-scale, literal trillions of dollars are at stake. That can make the once-unimaginable not only possible but probable. It's forcing all the big companies into playing 3D strategic chess on multiple time horizons at once, simultaneously working with, investing in and hedging against each other. It's 'co-opetition' (https://en.wikipedia.org/wiki/Coopetition) where the smaller players are grouping into uneasy factions and tactical alliances while the biggest players try to 'commoditize their complements' (https://gwern.net/complement). This can create strange bedfellows overnight. I wouldn't be surprised to see some of NV's biggest customers, who compete fiercely against each other, pooling resources with NV's competitors to create a viable alternative to NV. This is the stuff Jensen has nightmares about, waking up in a cold sweat and soaked black leather pajamas.
Their strategy is to prevent open models from proliferating, so their massive investments in these AI frauds are not completely unwound.
That's my take, at least.
Nemotron is TERRIBLE, and purposefully so. It must be.
They cannot be THAT BAD at training AI models. I don't believe it.
I think almost the exact opposite. They want open models. Without credible open models, they only have a few customers, and those customers have leverage against nvidia. With open models, they have tons of customers, and nvidia has all the leverage.
Smaller customers are also less able to develop their own hardware and threaten NVidia's business.
Sure but it also means these companies nvidia buys don’t work with AMD and other competitors anymore. There are myriad motivations and it’s not all one or the other but this is a classic component of Silicon Valley acquisition strategies.
Have you used Nemotron-3.5-lightening? I don’t use it as much as Poolside’s (excellent!!) Laguna XS 2.1 6bit, but the new Nemotron model is good.
I think NVIDIA does want small open models running on-prem to explode as a market! Lots of smaller GPU installations for companies who wisely want on-prem inference.
Of course NVIDIA will also keep making a ton of money selling to hyper scalers, but not forever: Chinese chips are getting better, Google, Microsoft, Amazon, etc. designing their own inference chips.
NVIDIA is handling this brilliantly.
I believe NVIDIA's long term strategy will be to pivot from the data center to the public, and the public will utilize open models on NVIDIA hardware at home. This will come after the RAMpocalypse completes (when the new fabrication plants (China, Tesla/SpaceXAI/Intel) fully ramp up and start selling their RAM for cheap in the next few years). Data centers will be for training mostly.
Why do you think the public wants to self host models over using a cheaper solution hosted in the cloud?
There’s a lot about this that would make sense.
But, not really at the current technologies. Kimi and GLM are fucking awesome, but I don’t have 3TB of VRAM to run them, and I don’t expect to even when ram prices drop.
So now you’re back to the scaling issue before talking about power and compute distribution.
Nvidia is trying to increase its customer base. Look at the Mag 7, Amazon, Google, Microsoft, and even Meta are all working on their own inference chips. I don't think they can completely ditch Nvidia for LLM training, but they can make their own chips for inference. I believe that's also why OpenAI made its own.
No one wants to pay the Nvidia tax
I doubt Nvidia wants to be fully dependent on the success of two highly unprofitable companies that could implode at any moment. It makes much more sense for them to commoditize LLMs so that their target market grows to every mid-sized or larger company.
Maybe as an LLM it is, but I constantly use their streaming ASR model (called Nemotron Streaming) through Handy and it works wonderfully well.
The other way. Nvidia would love open source jevon paradoxed ai - that would run inference on their chips.
But their goal would be to ensure it only runs on their chips, and not any competitors. I can't see how they could do that if the best models truely were "Open".
I can see one of Nvidia's biggest fears is the inference hardware becoming commoditised.
can someone weigh in on this. what's the actual play here
are they actually suppressing the western open models?
china doesn't give a fuck either way
imo, they see the weakness emerging at the intersection of all the labs, everybody knew there was no moat, so they're gonna control its direction and basically tell the Jev guys what they want them to work on
It’s just an illogical conspiracy theory. Open weights models still have to run on someone’s chips. NVIDIA is model-agnostic.
They are just trying to grow the pie because they have nobody else competing for slices.
My guess is they want as many frontier models using their chips as possible. The only threat to their business is companies making their own chips which Google does and the others are working toward. The last thing they want is only 3 frontier labs who are all not buying NVIDIA.
yes, this is my read as well. Nvidia does not care about how many LLM provider is out there as long as they pay the toll (Nvidia tax). for now, you can't beat the Nvidia CUDA/chip for training but for inference. that's where you can gain ground.
Hugging Face - distribution for model that you can run on your local Nvidia Spark
Neoclouds - Nvidia setup a 500 billion investment fund with Wall Street so Nvidia can sell chip and this news about buying a LLM start up. it seem like another customer for Nvidia.
correct me if i'm wrong but i remember i saw an interview with Jensen where he want more company to have their own model and country to have their own LLM model.
Nvidia doesn't make money from the gold rush. Nvidia made money from selling the shovels.
I think the idea that they’d purposely spend company time and resources making a bad model is an extraordinary claim, requiring extraordinary evidence. The more likely explanation is that they aren’t willing to distill from their own customers, so they are at a disadvantage.
Insane conspiracy theory. There's no incentive whatsoever for Nvidia to release weak models. If you bothered to pay any attention, they are aggressively trying to catch up. Whether they succeed, that's of course a separate question.
why would Nvidia try to compete against their biggest customers - openai and anthropic ?
the power that giveth can also taketh away.
similar to how eventually AWS started making their own chips for data centers, and Apple did that for their hardware, it's not a ridiculous thing to plan for the AI companies to start making their own chips to optimize for their use cases and cut out the middleman for margins.
So that nvidia gets bargaining power...? Nvidia needs to diversify its customer base
boy do I wish US capitalism could chill on the consolidation...
The Sarbanes-Oxley Act of 2002 could be considered the worst regulation of 21 century. It helped created behemoth corporations, where a single person can misallocate hundred of billon of dollars (Oh, hi Mark), they can buy out any competition.
Right now US economy is basically a centrally planned economy.
I've seen people use those three words to make a dig at zuckerberg before, but I never put 2 and 2 together and realized the quote until just now. I think the comma was essential, made my brain automatically read it correctly... Wiseau voice and all, lol.
More on-topic: I remain amazed by how the past quarter century of American legislation has included one overwhelming boon for corporations after another. Once corporations could give an infinitly higher amount of political contributions when compared to individual citizens, it became clear that the overall well-being and happiness of corporations was the only real political focus. Anything that doesnt directly or indirectly benefit a group of corporations is almost always designed to manipulate the electorate through invented/perceived/embiggened/non-cromulent "social issues".
> It helped created behemoth corporations
What's the mechanism for this? Genuine question: I read an overview over Sarbanes-Oxley and it seems like a reasonable idea.
Huh? new tech companies have proliferated in the US the last few years. M&A is just one side of the coin. Without an exit path -- IPO, acquisition or private credits -- there is very little appetite for new businesses.
Did you know that 151 companies were founded by SpaceX's alumni? Compare to 5 they've acquired (not including XAI)
Reflection AI was founded in 2024. Is it really consolidation when new companies spawn out of nothing and get acquired 2 years later? That's just normal M&A churn.
If all successful new tech companies are absorbed into existing dominant tech companies, that would in fact be consolidation.
what are they going to do with all the free money people are investing on them?
Back in the day, things like these were outlawed and the government tried to ensure competition in the markets:
> The major film studios owned the theaters where their motion pictures were shown, either in partnerships or outright. Thus, specific theater chains showed only the films produced by the studio that owned them. The studios created the films, had the writers, directors, producers and actors on staff (under contract), owned the film processing and laboratories, created the prints and distributed them through the theaters that they owned: In other words, the studios were vertically integrated, creating a de facto oligopoly. [...] Ultimately, this issue of the studios' then-alleged (and later upheld) illegal trade practices led to all the major movie studios being sued in 1938 by the U.S. Department of Justice.
https://en.wikipedia.org/wiki/United_States_v._Paramount_Pic....
Nowadays it seems like "vertically integrated" is something most companies openly aim for.
As usual, Wikipedia has it backward. There were very few theaters in existence able to show films produced by the studios. They invested in theaters and found local businessmen to operate them, both as sole proprietors and as partners.
The investment was out of necessity, not interest in monopolies.
Writers and directors craved an audience, so they appealed to studios for funding. That’s opportunity meeting, not monopolistic practices.
I for one am excited by the prospect of a well-funded open-source competitor to Anthropic, OpenAI, and the Chinese models.
I don't love that it's Nvidia. They're already in some weird incestuous thing with two of those three (and the rest of the market).
I would be too. Where are we going to buy the GPUs though?
It should be very clear that Nvidia is not interested in selling you GPUs to run models. But it’s very interested in selling data centers that you can use to run models in a way that everybody on their end “accepts”.
They just took the 5090 of the market. Too powerful for ordinary people I guess.
Eh, given the level of trading between NVidia and the established AI companies will it be a true competitor?
That can happen without consolidation, the funding is already so circular it's dizzying