A graphics processor is a piece of computer equipment, and computer equipment loses value fast. Nvidia wants the world to treat it like an office block instead: something that earns money for years, that a lender will lend against, and that somebody else will happily take over if the borrower walks away. Jensen Huang took the idea to Wall Street himself, according to Goldman Sachs chief executive David Solomon.
On 10 August Nvidia announced partnerships with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR to set up independent compute financing platforms, aiming to mobilise more than $500 billion for AI data centres over time. Goldman is the only bank in the group. The other five manage other people's money, mostly institutional and insurance.
What the platforms are meant to do
Data centres are expensive, and until now the companies filling them with Nvidia hardware have paid for that out of their own pockets. These platforms are meant to move the cost somewhere else: dedicated pools of money, at what Nvidia calls attractive rates, that its customers can draw on without borrowing against themselves.
Nvidia's pitch to a lender is that its chips are widely used, move easily between customers and operators, and keep getting better through its CUDA software, which stretches how long one stays worth owning.
That runs against how the market has always treated chips, and the doubt is easy enough to state: the next generation arrives and the last one gets cheaper. Larry Fink of BlackRock calls it the start of the next future for financial engineering, the way bonds backed by home loans were in the 1970s. He also says some money has already been raised, and that BlackRock will be raising quite a bit more.
What has actually been signed
Memorandums of understanding. Nvidia's own release says the partnerships remain subject to execution of the final agreements, and its forward-looking statements list those agreements, their terms, their timing and their benefits among the things that may not turn out as described. BlackRock and Blackstone call it a potential strategic partnership. KKR calls it a proposed transaction.
The $500 billion carries no deadline and no split between the six platforms. It is an ambition with six signatures of intent behind it, in a year when rating agencies have already warned that data centre spending is eating into the free cash flow of the companies doing the building.
