Nvidia CEO Jensen Huang shared a new plan this week to help pay for the rising cost of building AI infrastructure. He said the money will come from Wall Street firms instead of tech company balance sheets.
Huang made the announcement during a CNBC interview on Monday. He appeared alongside leaders from Goldman Sachs, BlackRock, Blackstone, KKR, Apollo and Brookfield.
Together, these firms say they are willing to raise 500 billion dollars or more. The funds would go toward building new AI data centers, sometimes called AI factories.
Huang and the other executives said this marks a shift in how the industry works. They believe AI computing systems should now be treated as a new kind of asset.
"These systems are not like our PCs, not like our phones," Huang told CNBC's Becky Quick. "These are revenue-generating assets now. They're productive, they're long-lived, they're fungible, they're flexible."
A New Source of Funding
For the past three years, big tech companies have paid for AI growth using debt and stock sales. Some companies have spent so much that their cash flow turned negative.
This year alone, Alphabet, Amazon, Meta, Microsoft and Oracle have raised more than 150 billion dollars combined. The money went toward data centers and new AI models.
Intel also announced a stock offering of 15 billion dollars, then raised it to 20 billion dollars.
Now financial firms want in on a different way. Goldman Sachs CEO David Solomon said this shift makes sense because AI equipment now carries real value.
"You're starting to see, in a sense, asset-based financing against this infrastructure buildout," Solomon said. "That's not surprising because these are real assets. They have real value."
KKR's Waldemar Szlezak said the AI systems could work like a revenue stream. He said the risk tied to them could be divided and sold to investors.
Some See Risk in the Plan
The announcement raised questions about risk, since a similar idea played a role in the 2008 financial crisis. Back then, mortgage loans were bundled into securities and sold to investors.
Michael Burry, an investor known for predicting the mortgage crash, has said some tech companies may be understating how fast their AI chips lose value.
The executives on Monday did not mention the mortgage crisis directly. But some admitted there could be trouble ahead.
Apollo Global Management president Jim Zelter said there could be pullbacks in the AI market. He said having many firms involved lowers the risk of one group taking on too much danger.
Solomon said some companies will succeed in the AI buildout, while others may fall short of expectations.
BlackRock CEO Larry Fink compared this moment to his early career in the 1970s, when mortgage-backed securities were just starting.
"I look upon this as a next future for financial engineering," Fink said.
Huang said each firm will make its own lending decisions. Nvidia plans to help connect companies that need financing with the firms willing to lend it.
Nvidia also said it may back up to 25 percent of each loan. This could help borrowers get better interest rates than they would get on their own.
Companies that borrow money under this plan will need to build systems using Nvidia's approved designs. That setup would let another company take over the equipment if a borrower runs into trouble.
Brookfield CEO Bruce Flatt said Huang helped create a structure for investors to join the plan.
"Jensen's leading this to create structures," Flatt said, "because there's hundreds of trillions of dollars of money in the world."
