Goldman Sachs · Nvidia · Jensen Huang · Bloomberg · TechCrunch AI
Nvidia’s new $500 billion plan is risky but brilliant, especially for aging GPUs
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Nvidia announced this week that Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR were willing to commit up to $500 billion to build AI data centers.
Key facts
- Nvidia announced this week that Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR were willing to commit up to $500 billion to build AI data centers
- The situation has become so dicey that Microsoft CEO Satya Nadella recently recommended the book “1873” during his latest earnings call
- And it has been working on another $750 billion worth of circular deals this summer, Bloomberg has calculated
- Then, like so many buggy whips in the face of automobiles (to paraphrase Danny Devito’s Lawrence Garfield), demand dries up and everything crashes
Summary
To convince those big-name financial companies, Nvidia has agreed to guarantee, with its own money, that its chips used as collateral in these deals will retain their value. Many have now commented on how unusual, smart, and dangerous this plan is. But underneath the financial maneuvering to fund AI data centers (and keep revenue for Nvidia flowing), is something, perhaps, far more interesting for startups and enterprises: Huang wants to ensure an ecosystem of used AI hardware flourishes, helping sustain demand for Nvidia hardware as it ages. Specifically, Nvidia is promising that if GPUs used as collateral don’t retain their value as expected, the company will cover up to 25% of the difference.