Nvidia is the lender because banks will not do it alone, five-year CDS closed near 83 bps, around the highs

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Credit guys smell the loop. Equity guys still clap for the print.

Ricardo
@Ric_RTP
Jensen Huang just admitted the biggest AI labs can’t borrow money like normal companies.

So Nvidia signs for them, and they spend it on Nvidia chips.

Nvidia reported Wednesday and the numbers are absurd:

Revenue of $96.2 billion, up 106%, with net income of $59.7 billion, the most profitable quarter any public company has EVER posted.

And Huang just told Fox Business that every chip Nvidia can make next year is already sold.

Here’s why this matters the most:

Huang wrote this himself about his own customers: “Frontier AI labs have extraordinary demand for training and inference compute, but many are growing faster than their balance sheets and long-term credit profiles can support.”

Then: They “still lack the decades-long infrastructure contracts and investment-grade financing capacity needed to secure the AI factory infrastructure independently.”

Put simply: His customers can’t get the loans.

So Nvidia signs for them.

There’s a compute campus going up in Ohio with OpenAI as the tenant. Nvidia has tied roughly $105 billion in commitments to it. OpenAI’s existing and planned commitments now come to about 12 gigawatts of Nvidia compute.

CFO Colette Kress told analysts Nvidia will also provide selective credit enhancement for nearly 2 gigawatts of compute at a second frontier lab. She wouldn’t say which one.

Nvidia put up to $10 billion into Anthropic in November at a valuation near $350 billion, and Anthropic agreed to buy up to a gigawatt of Grace Blackwell and Vera Rubin systems in the same deal.

And Nvidia isn’t only guaranteeing these companies. It OWNS pieces of them.

This week’s filing shows $18 billion committed to equity investments for the rest of the fiscal year, and $47.9 billion already sitting in private companies as of late July.

Now here’s where it gets really insane:

Last week, Huang sat on a CNBC set surrounded by six of Wall Street’s biggest firms. Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR. They signed a memorandum to mobilise up to $500 billion in outside capital for AI data centres.

Nvidia kept the option to backstop up to a quarter of those deals.

And Huang used that stage to announce that Nvidia GPUs are now an asset class. Pension and credit funds can now lend against graphics cards the way they lend against office towers.

Kress saw the accusation coming and got ahead of it on the earnings call: “We recognise the scale of this support, and we know some will call this circular financing. We see it differently.”

But look at the two things Huang says about the same companies.

On the earnings call he said AI has hit its inflection point, that the tokens are productive and profitable, and that compute is now revenue.

But he also said those same labs can’t secure investment-grade financing on their own.

A business that’s inflecting into profit is exactly the business a bank lends to. Banks lend against cash flow every day. But Nvidia‘s guarantee exists because something in that first story isn’t landing with the people whose job is pricing risk.

Kress does have a real answer to this though. She said the second lab’s credit support only complements capacity it already secured on its own, without Nvidia backing it. Vendor financing is also old and legal. Cisco did it and GE built a finance arm on it.

Huang’s case is that Nvidia understands these businesses better than any lender could, and he says the risk is low and his only regret is not investing more and sooner.

He may be completely right.

But one thing is certain:

Nvidia guarantees the paper. The paper buys the chips. Nvidia books the sale. Then Nvidia tells you the order book is full for a year.

That order book is the entire argument for a $5 trillion company.

And Jensen Huang just explained, in his own words, that his customers couldn’t have written those orders without him.

Isn’t this suspicious?

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