Nvidia's bet that its chips can finance the AI boom gets a Wall Street reality check
NVDA•Lenders are seeking stronger guarantees for Nvidia’s $500-billion chip-backed financing plan, questioning whether its AI chips can retain value long enough to serve as collateral. Deals worth tens of billions of dollars in the pipeline are likely to include stronger guarantees and customer contracts, sources said.
1. Lenders seek stronger backing
Nvidia’s financing plan has prompted debate among lenders and investors over the long-term value of its chips and related infrastructure. Banking sources said some lenders want stronger guarantees than Nvidia initially outlined, while deals worth tens of billions of dollars in the pipeline are likely to include guarantees and customer contracts.
2. Disagreement over chip life
Nvidia has said its GPUs can have a useful life of up to a decade and described its AI compute as a “productive, durable and fungible asset.” Some credit investors and bankers take a more conservative view: one portfolio manager said banks typically underwrite GPUs on a three-to-four-year depreciation schedule, and investors may seek higher interest rates and stronger repayment protections.
3. Existing financing examples
CoreWeave closed an $8.5-billion GPU-backed facility supported by Meta’s contractual payments. Separately, Broadcom backstopped more than 80% of a $35-billion financing structure for AI computing capacity for Anthropic. Nvidia’s August plan, announced with financial partners including Blackstone, Apollo and KKR, aims to use chips as collateral to help AI developers access compute.
