Nvidia, the lender of its own illusions

Nvidia is no longer merely selling the processors that power artificial intelligence machines. The company is also helping guarantee the buildings, electricity contracts and minimum revenues of the customers who buy them. That turns the chipmaker into something resembling a lender of its own future.

In August, Nvidia guaranteed up to $105 billion for a data center in Ohio. A week earlier, it sought to mobilize more than $500 billion with a group of banks. The official story is simple: financial markets will not provide capital at the scale these facilities require, so the company best positioned to understand the risk steps in. Nvidia can point to almost $100 billion in cash and a business that could generate nearly $200 billion this year.

But the article sees a contradiction beneath that confidence. Nvidia presents its processors as fungible, durable and almost bankable assets, while releasing a new generation every year so the previous one looks old. The apparent consistency of the model, it argues, depends on scarcity.

The warning recalls the late 1990s, when Cisco and Lucent lent money so customers could buy their routers. The network grew, but not quickly enough. Warehouses filled with equipment that buyers no longer wanted at boom-time prices, leaving damaged balance sheets and a lesson Silicon Valley prefers to file away as context. Investor Michael Burry has raised the key question: what happens if chips age faster than the seller promises, or if usage fails to keep pace with the concrete being built?

The article says Nvidia now acts as investor, supplier and, when necessary, customer of its customers. It buys shares, guarantees a floor for new cloud companies' revenues and retains a stake if prices rise. In Mexico, Marcelo Ebrard posted a video of Jensen Huang calling him a “great friend of Mexico” and saying Nvidia's AI supercomputers are manufactured there, with a visit planned to launch the country into that era. Some saw industrial strength, others assembly wrapped in rhetoric. The article says both readings may be true. If demand falls short, the surplus may not be a processor in Nvidia's California headquarters, but a transformer, a CFE contract and a memorandum of understanding.

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great friend of Mexico