Nvidia Seeks $500 Billion Financing Push, Says AI Chips Have Become 'Investable Asset Class'

Nvidia is seeking to turn artificial intelligence chips and computing infrastructure into a new investable asset class, joining hands with six of the world's largest asset managers in a financing initiative aimed at mobilising more than $500 billion in third-party capital.

The chipmaker has signed memorandums of understanding with Apollo Global Management, Blackstone, BlackRock, Brookfield Asset Management, Goldman Sachs and KKR to establish financing platforms for its customers, Nvidia said in a statement on Monday.

ALSO READ: Apple Cut at Jefferies On iPhone Worries As Sell Ratings Pile Up

Executives from all seven companies discussed the initiative in a rare joint live interview with CNBC's Becky Quick.

The financing platforms are designed to help hyperscalers, frontier AI laboratories and enterprises fund data-centre expansion and purchases of Nvidia hardware. The initiative will use institutional credit, insurance funds and private capital to finance GPUs and data centres, potentially allowing Nvidia customers to expand their AI infrastructure without relying entirely on their own balance sheets.

“This is really the first time that technology chips have become an investable asset class,” Nvidia founder and CEO Jensen Huang told CNBC. “These are revenue-generating assets now. They're productive, they're long-lived, they're fungible, they're flexible.”

Huang said Nvidia's hardware can be treated as a revenue-generating asset because its chips are widely deployed and can be transferred across customers. This, he argued, gives lenders greater confidence in underwriting computing infrastructure over an extended period.

Traditionally, GPUs have been viewed as hardware that depreciates rapidly, particularly as newer generations of chips emerge. Nvidia's financing initiative challenges that view by positioning AI computing capacity as long-term infrastructure that can support borrowing.

“Fundamentally, what's different about this industry and this way of doing computing is that the computer is now part of the infrastructure, like electricity, like the internet, and so you have to think about it like it's infrastructure,” Huang said.

Nvidia approaches Wall Street

Goldman Sachs CEO David Solomon said Jensen approached the Wall Street firms with the idea for the financing initiative.

The asset managers involved in the programme see growing demand for AI computing and an opportunity to create a new market for credit backed by Nvidia's infrastructure.

“We're in a pivotal moment of a historic AI investment cycle,” Solomon said in Nvidia's statement. “Our investment and distribution roles reflect our confidence in NVIDIA's leadership, and we're excited for the new opportunity to create a market for credit backed by NVIDIA compute.”

Blackstone President Jon Gray told CNBC that AI compute could eventually be viewed as a “financeable asset class”, similar to the way mortgage lenders assess residential property.

Gray said demand for AI computing is currently outpacing supply, adding that usage across Blackstone's portfolio companies has increased sevenfold this year.

BlackRock CEO Larry Fink described the initiative as the beginning of a new phase of financial engineering, comparing it with the development of mortgage-backed securities in the 1970s.

“Some funds have already been raised, but BlackRock will be raising quite a bit more,” Fink said, according to CNBC.

“We need to raise this money as fast as possible and put this to work, because I think it's really imperative that the United States is the leader in AI in the world,” he added.

AI spending raises funding questions

The financing push comes as technology companies continue to commit hundreds of billions of dollars to data centres, GPUs and other AI infrastructure.

It also follows a period of market volatility in July, when investors increasingly questioned whether the massive AI investments by Big Tech companies would generate sufficient returns.

Hyperscalers are expected to continue spending heavily on AI infrastructure, while rating agencies have raised concerns that unprecedented capital expenditure could put pressure on free cash flow and push technology companies towards greater debt.

Alternative asset managers have already been increasing their exposure to digital infrastructure, using institutional and insurance capital to finance AI-related projects. Apollo and Blackstone, for instance, have structured debt and equity financing for companies including Anthropic.

Nvidia's latest initiative could therefore mark a broader shift in how AI infrastructure is financed, with GPUs and computing capacity potentially evolving from conventional technology equipment into assets that can be financed against future revenues.

ALSO READ: Meta Unveils Local AI Model Muse Glimmer, Calls For Open-Source Push Against Chinese Rivals

Essential Business Intelligence, Sharp Market Insights, Practical Personal Finance Advice, Daily Fuel, Gold and Silver Prices and Latest Stories — On NDTV Profit.