Silicon Data CEO Carmen Li says the GPU forward curve has flipped to contango, so the market expects compute prices to keep rising over the next 36 months “So, the yellow line was last year, right? The horizontal line is the duration, and the dollar amount is the Y axis. So, last year was complete downward sloping curve for the yellow line, right? Meaning the longer term contract you signed, the cheaper, you know, was per GPU per hour." "And this year, starting early this year, the whole curve shift up and became contango. If you see the red line, right?" "So, translate to people not getting enough discount for longer term contract. Implies that people assume the price going to rise down the line." "And now you see the price, the whole curve keeps shifting up, got flattened, right? So, meaning people are now either get penalized or get, you know, awarded by signing long term contract." "This is reserved contract we observe. And if you look at implied forward rates, this is the implied forward rates, right? Because we don’t have a future trading. So, this is calculated based on our term structure. And we use similar methodology as Treasury futures curve." "So, you can see a market consensus view is the price could go up in the future, next 36 months.”

Elon Musk says there's no AI demand issue and explains why SpaceX rents its compute on short-term contracts: AI compute is worth more per watt every year, renewals are coming in at higher prices, and the market is a “cheese shop” with no chips left “Our belief is that the value of compute per watt will increase over time, not decrease. And the reason for that, I think it should be obvious to people really, is that as you improve the AI software, as the models get better and better, they’re able to, you get more useful intelligence per watt. And the value of that compute is proportionate to the useful intelligence per watt. And that’s why you see things like even old computers like H100s renting for more than they rented when they were new.” “And I think that’s likely to continue. I think we’re going to face a shortage of superintelligence compute. And that shortage is going to remain for a long time. So, I think the smart move is to do short-term contracts and to essentially place the bet on useful intelligence per watt increasing rapidly, which obviously is done, so that’s what’s happened so far.” “And also if you look at, say, how are our short-term contracts renewing? Are they renewing at higher dollars per watt or lower? And we see them renewing at higher dollars per watt, not lower dollars per watt. We are also frankly hounded relentlessly by every hyperscaler and by dozens of smaller companies to rent more of our compute. So we could rent out our compute several times over if we said yes to everyone. That’s just the situation here.” “That’s why I posted that sort of video meme of the Monty Python cheese shop sketch where the guy goes into a cheese shop to get some cheese and they actually have no cheese. And so he goes like, what about this kind of cheese? What about that kind of cheese? And they really just don’t have any cheese.” “So we’ve actually tried to offload some of our inference compute to other cloud providers so that we can use more compute for training. And we get the cheese shop sketch. You know, they’ll say, like, well, we’ll ask them about what about some, you know, GB300s? Nope, don’t have any of those. What about, you know, some GB200s? Nope, don’t have any of those. What about some TPUs? Nope. What about some Trainiums? Nope. What about some, okay, how about some H100s? And like, well, we might have some overseas somewhere and then they’ll check and come back and say, nope, we don’t have that either. So it’s like ridiculous.” “Yeah. So I don’t think we’re going to have a demand issue here. And like, it’s not impossible. I’m not saying this will happen. It’s not impossible that we will have a six-month payback period for compute next year.”