How did $NVIDIA (NVDA.US)$ manage to exceed expectations and...

How did $NVIDIA(NVDA.US)$ manage to exceed expectations and raise guidance? Jensen Huang, having experienced the dot-com era, seems to have applied some familiar revenue inflation tactics.

For those who remember the dot-com bubble, "round-trip trading" or "ad swapping" was a common practice. Here's how it typically worked:

1. Ad Purchases: Company A would buy advertising from Company B.
2. Reciprocal Ad Buys: Company B would, in turn, buy advertising from Company A.
3. Revenue Inflation: Both companies would report these transactions as revenue, even though no new money was actually entering the business ecosystem. Instead, it was just being passed back and forth.

In a similar vein, what is Nvidia doing now? Here's the pattern:

1. GPU Purchases: Company A buys GPUs from Nvidia.
2. Cloud Computing Credits: Nvidia, in turn, buys "credits" for future cloud computing services from this company.
3. Revenue Reporting: Both companies report these transactions as revenue.

And what's Nvidia (and others) do now? Company A buys GPUs from Nvidia, Nvidia in turn, buy "credits" on future cloud computing services at this company, and both companies reports these transactions as revenue!

Take a look at the commitments reported last week.

Commitments have more than doubled in three months earlier this year to nearly $9 billion on cloud computing for the coming years, involving spending with companies like CoreWeave, $Amazon(AMZN.US)$ , $Microsoft(MSFT.US)$ , $Alphabet-C(GOOG.US)$ , $Oracle(ORCL.US)$ , and others.

How long can this round-trip trading continue? We will see...