Tech Giants Use Complex Financing to Fund AI Chips
Major technology companies and financial institutions are using special purpose vehicles and convertible notes to shift billions in AI chip debt off balance sheets.
Nvidia Inc. and other technology leaders are utilizing complex financing structures to fund the massive acquisition of AI hardware while shifting billions in debt off their primary balance sheets. Nvidia has established a funding platform with partners including BlackRock and Goldman Sachs to attract over 500 billion dollars in outside capital, offering to backstop 125 billion dollars of that debt.
Other industry players are employing similar strategies to manage the high cost of infrastructure. Amazon is pitching a special purpose vehicle to hold 8 billion dollars in Nvidia Grace Blackwell chips to raise debt and lease them back. Meta Platforms Incorporated previously financed its Hyperion data center using 27.3 billion dollars in bonds through Blue Owl's Beignet vehicle.
In the AI development sector, Broadcom Inc. is providing up to 42 billion dollars in convertible notes to Anthropic for the lease of Google TPUs, while banks assemble an additional 60 billion dollars for Broadcom's financing. Analysts warn that these structures often rely on the credit ratings of parent companies rather than the depreciating value of the hardware, creating a risk that the debt may outlive the useful life of the chips.
