Nvidia CEO defends AI financing push, says risks remain low

Nvidia CEO Jensen Huang defended the chipmaker’s growing financial support for artificial intelligence companies, saying the investments represent a “once-in-a-generation” opportunity and pose limited risk to the company.

Huang told CNBC late Wednesday that developing and deploying AI requires unprecedented amounts of capital, with some startups needing tens of billions of dollars before becoming profitable.

“This is the first generation of startups that needed tens of billions of dollars to get funded,” Huang said, adding that the capital-intensive nature of AI distinguishes the sector from previous generations of technology startups.

Nvidia has used the cash generated by surging demand for its AI chips to invest in companies across the industry, including model developers OpenAI and Anthropic and cloud providers offering access to Nvidia-powered computing infrastructure.

The chipmaker has also expanded its role in financing data center projects. These include $105 billion in financial support for a computing campus under construction in the US state of Ohio, where OpenAI is expected to be the tenant.

Nvidia recently announced a partnership with major Wall Street firms to arrange up to $500 billion in data center financing.

The deals have prompted criticism that Nvidia is engaging in “circular financing,” in which a company funds customers that subsequently use the money to purchase its products. Critics argue such arrangements could artificially bolster demand and revenue, drawing comparisons with practices seen during the dot-com bubble.

Huang rejected those concerns, saying Nvidia wants to invest in leading AI developers, help them secure computing capacity and encourage them to build their ecosystems on the company’s technology.

He said many frontier AI companies lack the financial history or investment-grade credit profiles needed to obtain low-cost financing independently, creating a role for Nvidia’s financial backing.

Huang also said Nvidia’s exposure would be limited if one of the companies it supports encountered financial difficulties, as the computing infrastructure could be reassigned to other customers and workloads.

“The money we’ve invested is going to generate tremendous returns,” he said. “I think the risk is low.”

His comments came after Nvidia reported better-than-expected fiscal second-quarter results.

The company’s revenue more than doubled from a year earlier to $96.2 billion, while data center revenue surged 117% to $89 billion. Nvidia shares rose around 4% in extended trading following the results.