Nvidia and Financial Giants: $500 Billion for AI

Nvidia and Financial Giants: $500 Billion for AI

Nvidia and six major financial companies plan to mobilize over $500 billion in third-party capital to build AI infrastructures such as data centers.

To support this financing, Nvidia guarantees up to 25% of the residual value of its own chips installed in these projects.

While critics warn of a financial bubble fueled by rapidly obsolete hardware, Nvidia CEO Jensen Huang emphasizes the rising rental prices and argues that its processors have long economic lifespans.

Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR are the partners that will mobilize over $500 billion for AI infrastructure. To make the numbers work, Nvidia guarantees a portion of the residual value of its own chips. Critics like investor Michael Burry consider the long-term value of these chips to be one of the biggest weaknesses of the AI boom.

Nvidia has signed letters of intent with six major financial companies to mobilize over $500 billion in third-party capital for data centers, chip factories, and power plants. According to the Financial Times, which revealed the agreement, Nvidia's stock fell by about 1.4% afterward, wiping out more than $70 billion in market capitalization.

Nvidia CEO Jensen Huang described this initiative on X as a shift from one-off projects to repeatable financing platforms. The "AI factories" are expected to be funded like productive infrastructures, similar to power grids or transportation networks. Many AI companies need computing power but cannot access capital at the necessary scale. Huang clarified that the $500 billion represents a global target spread over several years, not revenue for Nvidia, nor a single fund, nor a commitment to a specific client. Nvidia has not shared the terms, individual commitments, or a timeline.

Nvidia Guarantees Up to 25% of the Residual Value of Its Chips

Huang also responded to accusations that Nvidia's funding of neo-clouds and AI companies would be circular. The company plans to support individual projects with residual value guarantees. If the resale or reuse value of the installed hardware falls below expectations at the end of a financing period, Nvidia covers part of the gap, up to 25% of a given transaction, evaluated on a case-by-case basis. The chipmaker essentially assumes part of the depreciation risk of its own products. Huang claims that this share is "significantly lower" than that of other IT financing arrangements, and that the actual credit assessment—i.e., the evaluation of the customer, demand, usage, cash flows, and residual value—remains in the hands of capital providers.

Nvidia regularly supports its partners in debt financing, which in turn boosts the company's revenue. The company is also negotiating a guarantee for a 10-gigawatt data center in Ohio, leased to OpenAI.

Huang's Argument Directly Responds to Michael Burry's Depreciation Warning

Huang's reasoning closely addresses the criticisms from investor Michael Burry, who labeled the depreciation practices of hyperscalers as "one of the most common frauds of the modern era." Burry argued that GPUs become obsolete too quickly for useful lifespans of five to seven years due to Nvidia's two to three-year upgrade cycle, and that depreciation would be underestimated by about $176 billion between 2026 and 2028.

Huang now asserts the opposite. He states that the A100, launched in 2020, is still in commercial use six years later and that its economic lifespan extends toward a decade. CUDA, he argues, continues to enhance the installed hardware over time. As market evidence, he cites the rising rental prices. Annual contracts for the H100 have increased from $1.70 per GPU-hour in October 2025 to $2.35 in March 2026, while the B200 capacity ranges between $5.30 and $7.05.

Morgan Stanley forecasts hyperscaler spending of $3.5 trillion between 2026 and 2028. Apollo's president, Jim Zelter, estimates that the total investment need exceeds $8 trillion. The Bank of England warned in its July financial stability report that the pace is historically unprecedented and that a shock affecting highly indebted AI companies could have repercussions on global financing conditions and trigger a credit crisis. The report noted that banks and private credit firms have limited visibility into their indirect exposure.