Nvidia Partners With Investment Firms for $500 Billion AI Fund

Nvidia Corp. has partnered with six major investment firms, including BlackRock Inc. and Goldman Sachs Group Inc., to provide $500 billion in financing for AI infrastructure. To reduce borrowing costs for its clients, Nvidia will implement a residual value support mechanism, guaranteeing up to 25% of specific projects on a case-by-case basis.

This financial structure allows customers to leverage Nvidia's high credit rating without recording the debt on their own balance sheets. The approach follows a template established by Meta Platforms Inc. for its Hyperion and Sopaipilla data centers, as well as similar backstops used by Broadcom Inc. for Anthropic PBC.

Rating agencies and investors have raised concerns regarding these off-balance-sheet contingencies, which they term phantom liabilities. Estimates suggest roughly $70 billion in such liabilities exist across major AI companies. Critics argue this financial engineering obscures the true financial state of these firms and increases the risk of a boom-bust cycle if hardware values drop and customers default during a market downturn.