Nvidia signed memorandums of understanding with six Wall Street firms — Goldman Sachs, BlackRock, Blackstone, KKR, Apollo and Brookfield — to raise $500 billion for AI infrastructure financing. Financial stocks jumped on the news, while analysts split over whether the deal shifts risk off Nvidia's books or revives fears of "circular" AI financing.
Nvidia confirmed late Monday that it will work with six of the world's largest financial firms to mobilize over $500 billion of third-party capital for the buildout of AI infrastructure. The companies signed memorandums of understanding, with no reference to any contracts.
CEO Jensen Huang unveiled the plan alongside executives from Goldman Sachs, BlackRock, Blackstone, KKR, Apollo and Brookfield. According to CNBC: "These are revenue-generating assets now", Huang said, framing AI computing systems as a new asset class rather than equipment companies simply buy and use.
Financial stocks jump on the news
Financial stocks moved higher on Tuesday after the announcement. KKR and Apollo stock jumped around 4% each, while Brookfield and Blackstone traded 3% higher. BlackRock gained less than 2%, while Goldman Sachs was roughly unchanged.
Nvidia itself rebounded 1.1% intraday after sliding nearly 3% on Monday, while rival AMD eased 0.1%.
With a $5.3 trillion market cap, Nvidia has reclaimed its position as the most valuable company on the stock market, a spot Apple held before selling off after its own earnings report.
Analysts split on the risk
Analysts were divided on what the arrangement means. Bank of America analysts said the effort shifts lending and depreciation risks off Nvidia's balance sheet, while others noted the private capital could let AI startups buy Nvidia chips instead of turning to rivals such as AMD.
However, the financing package also revived fears of "circular" AI deals, arrangements where a supplier funds a customer that then funnels the money back to buy the supplier's products. Nvidia's earlier plan to invest up to $100 billion in OpenAI never materialized in that form. Nvidia instead contributed $30 billion to the funding round OpenAI closed earlier this year.
Nvidia said it will have the option of backstopping 25% of every loan made under the new platforms, a structure that should result in more favorable interest rates for companies that previously had to rely on their own credit rating.
The announcement lands ahead of Nvidia's second-quarter earnings report scheduled for Aug. 26, where Wall Street targets call for $2.08 in earnings per share and $92 billion in sales.
Sources: CNBC, Investor's Business Daily, Investor's Business Daily
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