Wall Street Pushes Back on Nvidia’s $500B Chip Backed Financing Plan

Nvidia’s $500 billion financing plan, announced in August with Blackstone, Apollo and KKR, uses its AI chips as loan collateral with limited guarantees. Banks and credit managers say they want stronger guarantees than first outlined, and doubt that chips can serve as long-term collateral. Nvidia has said some deals could carry no more than a 25% residual value guarantee. Three banking sources said it may need to guarantee every deal or tie them to revenue from investment-grade customers. For now, they say, the market won’t treat compute like aircraft.

Nvidia’s Response and New Deals

An Nvidia spokesperson called AI compute a productive, durable and fungible asset, adding that financing partners assess each deal on its own. Sources say tens of billions in pipeline loans will likely carry strong guarantees and customer contracts, and demand to finance them stays high. CEO Jensen Huang has said the plan brings independent capital in and answers circular-financing worries.

How Long Do AI Chips Last?

Huang says GPUs can last up to a decade. Banks usually underwrite them over three to four years, said Tony Trzcinka of Impax Asset Management, who expects investors to demand higher rates and bigger cushions. Andrew Chang of S&P Global Ratings said five plus years has held up so far, yet S&P stays conservative. Loren Moran of Wellington Management expects investors to be pickier about compensation for added risk.

Precedents in GPU Financing

Nvidia cites cloud firms stretching server depreciation to five or six years, and a Barkr finding of 9 to 10 years for its GB300 NVL72 systems. CoreWeave’s $8.5 billion A3-rated loan relies on Meta’s payments. Broadcom backstopped over 80% of a $35 billion structure for Anthropic. Nvidia also gave a residual-value guarantee on SB Energy’s Ohio data-center project.