Nvidia signed memorandums of understanding on August 10 with Apollo Global Management, BlackRock, Blackstone, Brookfield Asset Management, Goldman Sachs and KKR to mobilize more than $500 billion for AI infrastructure. The money is not for Nvidia. It goes to Nvidia’s customers, so they can buy Nvidia hardware without funding it from their own balance sheets.
The debt will be issued by special-purpose entities through private offerings and bonds. Those entities buy the compute and lease it to Nvidia’s clients, with Goldman Sachs as lead bookrunner on the public deals.
What secures the debt is the compute itself. Nvidia’s argument is that its accelerators generate income, last long enough to amortize, and can be moved to another customer if the first one fails, which makes them behave less like depreciating equipment and more like an asset a lender can underwrite. “This is the first time that technology chips have become an investable asset class,” chief executive Jensen Huang said. Nvidia has said it may support up to 25 percent of a given deal.
Huang described the arrangement as “bringing the world’s leading long-term capital providers together to independently underwrite AI infrastructure.”
Larry Fink, who built much of the mortgage-backed securities market before founding BlackRock, drew the comparison himself. “I look at the financing of data centers,” he said. “This is the very beginning, like what it was when I started in the mortgage-backed securities market in the 1970s, and I look upon this as the next future for financial engineering.”
Not everyone accepts the premise. Felix Wang of Hedgeye Risk Management said the structure “also makes future demand more sensitive to credit conditions.” Terri Spath of Zuma Wealth said the market “needs an earnings reality check.” Skeptics have also pointed to obsolescence: the collateral case depends on accelerators holding resale value as newer generations ship.
The buildout has been moving toward credit markets for months. Broadcom, Apollo and Blackstone assembled a $35 billion financing structure for Anthropic’s next gigawatt in June, part of a platform designed to fund more than 20 gigawatts through 2028. Nvidia weighed a $250 billion backstop for OpenAI’s Ohio campus in July. Anthropic put its next data centers into a venture owned by Macquarie and GIC on August 10, taking the tenant’s seat rather than the owner’s.
Utilities have started asking for guarantees of their own. Several now require a bank letter of credit before they will study a data center’s grid connection.
The first deals are expected to reach the market within months.
Sources: Fortune, Barchart, Briefs
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By the Control Plane Editorial Team