Nvidia put $170B behind AI cloud customers, report says

Nvidia ↘ 0.59% has committed more than $170 billion through guarantees, purchase commitments and investments to support neoclouds and other large customers, according to an analysis of its filings by The Information, TNW reported. The Information also reported that the chipmaker is in talks to invest hundreds of millions of dollars in Firmus Grid, the Australian AI cloud company that dropped its planned listing this month, according to Bloomberg. The figures show how much the world's most valuable company is now doing to finance the customers that buy its chips. Investors have grown wary of these debt-heavy firms.thenextweb.com+1

How the commitments break down

The total includes as much as $164.5 billion in guarantees and other commitments to support new data centers, with figures running through Nvidia's July quarter, TNW reported. Nvidia has also invested, or agreed to invest, more than $7 billion directly in AI cloud providers. Chosun Ilbo put the total at $171.5 billion. Its breakdown included up to $108.5 billion in guarantees covering customers' data center rent, agreements to buy as much as $36 billion of server capacity that neoclouds cannot sell, and $20 billion in leases that Nvidia signs and then hands over to neoclouds.chosun.com+1

The paper said the approach helps Nvidia sell through more channels at a time when hyperscalers such as Amazon Amazon.com, Inc. ↘ 0.95% and Microsoft ↗ 0.66%, which made up 55% of its data center chip sales in the second quarter, are building their own chips. Critics see a circular structure in which the vendor funds buyers who then purchase more of its products, Chosun reported.chosun.com

Firmus after a failed float

Firmus withdrew its IPO earlier in October, citing market volatility. The listing had been planned at a valuation above $30 billion, Yahoo Finance reported. Firmus is now trying to raise at least $2 billion privately, MT Newswires reported. Nvidia is already an investor and joined a $2 billion Firmus round in August alongside Coatue, Blackstone ↘ 0.66% and Jane Street, AI Weekly reported. The two companies are also working on a campus in Batam, Indonesia, built to hold up to 170,000 Nvidia accelerators. Neither company has announced a new deal, and Nvidia did not immediately comment, according to Bloomberg.aiweekly.co+3

"We think that Firmus indeed has a compelling story. It just doesn't have a compelling valuation," said John Pearce, chief investment officer of a large Australian pension fund, as cited by TNW.thenextweb.com

Huang defends the strategy

Other neoclouds are also under pressure. CoreWeave ↘ 2.46% shares have fallen 50% in six months, TNW reported. Nvidia CEO Jensen Huang told CNBC on Thursday, October 22, that the sector lacks capital, not customers. "The demand for the neoclouds is off the charts," he said, adding that GPU computing "is now becoming an asset class" that lenders will finance, according to TNW. An executive at Nebius ↘ 0.27% told CNBC that all of the company's capacity scheduled for next year will be sold, Chosun reported.thenextweb.com+1