Nvidia CEO Jensen Huang argued that financial support for the artificial intelligence sector carries limited risk for the company, describing investment in the field as a once-in-a-generation opportunity.
Huang said developing and deploying artificial intelligence systems requires capital on an unprecedented scale. He noted that some startups may need tens of billions of dollars in financing before becoming profitable.
Nvidia’s financing for the sector
Nvidia is using the cash flow generated by demand for artificial intelligence chips to invest in companies across the sector. These include artificial intelligence model developers OpenAI and Anthropic, as well as cloud service providers that offer access to computing infrastructure supported by Nvidia.
According to Huang, artificial intelligence startups need far more capital at the outset than previous technology companies. The amount these companies require to access financing can reach tens of billions of dollars.
Ohio campus and Wall Street partnership
The chipmaker has also expanded its role in financing data center projects. Financial support totaling $105 billion is being provided for a computing campus under construction in the U.S. state of Ohio, where OpenAI is expected to be a tenant.
Nvidia also announced a partnership with major Wall Street companies to arrange up to $500 billion in financing for data center investments.
Defense against ‘circular financing’ criticism
The agreements prompted criticism that Nvidia could artificially boost demand for its products and its revenue by providing customers with financing for purchases. This approach was compared with practices during the dot-com bubble, when technology companies reached high valuations.
Huang said Nvidia invests in leading artificial intelligence developers, helps these companies acquire computing capacity and encourages them to build their ecosystems on Nvidia technology.
Huang said many pioneering artificial intelligence companies lack the financial history or investment-grade credit profiles needed to independently access low-cost financing, adding that Nvidia’s support therefore comes into play.
Huang argued that Nvidia’s risk would remain limited if one of the companies it supports ran into financial difficulties, saying the computing infrastructure could be redirected to other customers and workloads. “The money we invest will generate very large returns. I think the risk is low,” Huang said.
Revenue and data center results
Huang’s comments came after Nvidia announced fiscal second-quarter results that exceeded expectations. The company’s revenue more than doubled from the same period a year earlier to reach $96.2 billion.
Data center revenue rose 117% to $89 billion, while Nvidia shares gained about 4% in futures trading after the results were announced.
