Huang pushed Nvidia to finance chip buyers, WSJ reports

Jensen Huang pushed Nvidia ↘ 2.01% to finance cash-strapped customers so they could keep buying its chips, and he overruled his finance chief when she objected, The Wall Street Journal News Corp ↗ 2.45% reported. Weeks earlier, the company's own filing showed commitments and guarantees climbing to about $530 billion. The report came out on November 13, one day after Huang resigned and Colette Kress, the executive he reportedly belittled, took over as interim CEO. That puts the financing strategy under scrutiny just before Nvidia's next earnings report.

The August meeting

The Journal reported that Huang called his senior finance team to his office this summer to deal with a growing problem. Nvidia was in talks to provide billions of dollars of guarantees to companies that couldn't afford its chips, including deals led by his son-in-law, Nico Caprez, according to the Journal's report. Huang interrupted Kress's presentation and called her "a deer in the headlights," a person familiar with the comments told the paper. He also called her a "reporting CFO," BusinessWorld reported. Kress had questioned the risks, pricing and returns of the guarantees.wsj.com+1

Huang reportedly explained the deals by pointing to two pressures. Major cloud providers were moving to their own chips, and the wafers and memory Nvidia had committed to buy from TSMC Taiwan Semiconductor Manufacturing Company Limited ↘ 1.67% were coming "like an avalanche," according to Yahoo Finance's summary of the Journal's account. Kress helped cut Nvidia's proposed commitment to an OpenAI data center project in half. Wccftech, relaying the Journal's reporting, said Nvidia then contacted TSMC to wind down upcoming orders. Nvidia has not publicly confirmed the account.finance.yahoo.com+1

What the filing shows

Nvidia's 10-Q for the quarter ended July 26 lists commitments and guarantees that add up to about $530 billion, up from $184 billion a quarter earlier, according to SemiAnalysis's review. The filing itself prints no combined total. About $279 billion of the figure is supply and capacity commitments, and $108.5 billion is maximum guarantee exposure, which includes a backstop of up to $105 billion for an OpenAI-linked campus in Ohio, Market Speaker reported. In other words, most of the total is Nvidia's own purchasing obligations, not credit extended to customers.dataconomy.com+1

Customers are also paying more slowly. Receivables reached $63 billion, and collection times stretched to about 60 days from 45, Yahoo Finance reported.uk.finance.yahoo.com

A test for Kress

Huang resigned on November 12 after reports of extramarital affairs, including one with a suspected Chinese spy, Reuters reported. The company's announcement said Kress will remain CFO while serving as interim CEO.investor.nvidia.com+1

When Huang left, shares of CoreWeave ↘ 6.13% and other cloud providers that Nvidia backs fell harder than the rest of the AI trade. Nvidia still plans to report results on Tuesday, November 17, Yahoo Finance reported. "It does bring into question what we've been talking about for … the better part of the last year, which is a lot of these circular relationships," said Liz Thomas, chief market strategist at SoFi ↘ 1.34%.uk.finance.yahoo.com