Wall Street backs Nvidia CEO's plan to fund AI factories with $500 billion

Nvidia CEO Jensen Huang has unveiled a new financing model for the AI buildout, backed by some of Wall Street's biggest names. In a Monday interview, Huang presented his "big concept" alongside leaders from Goldman Sachs, BlackRock, Blackstone, KKR, Apollo, and Brookfield. Together, these firms say they're willing to raise $500 billion or more to construct new AI factories, responding to what they describe as endless demand for AI infrastructure.

Huang framed these systems as a new asset class, saying they are "revenue-generating assets" that are "productive, long lived, fungible, and flexible," unlike PCs or phones. The announcement, however, lacked specifics on borrowers, interest rates, locations, or timelines. The firms signed only memos of understanding, with no contracts mentioned. This follows an earlier Nvidia partnership to invest up to $100 billion in OpenAI that never materialized, though Nvidia did contribute $30 billion to OpenAI's recent funding round.

The financial firms see AI equipment as having real value for asset-based financing, as Goldman Sachs CEO David Solomon noted. KKR's Waldemar Szlezak suggested that revenue streams from these systems could be securitized and sold to investors. But the comparison to mortgage-backed securities raises caution, especially given the 2007-2009 financial crisis. Short-seller Michael Burry has previously suggested major tech companies are overstating AI chip lifespans and understating depreciation.

Some financiers acknowledged risks. Apollo's Jim Zelter said there will be "excesses" and "pullbacks," while Solomon warned that some big companies will fail to meet expectations. BlackRock's Larry Fink compared this moment to the early days of mortgage-backed securities in the 1970s, calling it "the next future for financial engineering." Nvidia will have the option to backstop 25% of each loan, and borrowers must use Nvidia-specified architectures. Brookfield CEO Bruce Flatt credited Huang with creating the necessary structure, noting there are "hundreds of trillions of dollars" available globally.

Source: CNBC