Wall Street giants partner with Nvidia on $500bn AI financing deal

{"text":[[{"start":14.52,"text":"The world’s largest financial groups are working with Nvidia to assemble a funding package of more than $500bn for AI infrastructure development, in one of Wall Street’s most ambitious lending efforts to date."}],[{"start":27.56,"text":"A consortium of groups including Apollo Global, Blackstone, BlackRock, Brookfield Asset Management, Goldman Sachs and KKR is entering a partnership with Nvidia to invest in the AI build-out."}],[{"start":39.84,"text":"Shares in the chipmaker fell about 1.1 per cent on Monday after the FT first reported on the arrangement, erasing nearly $60bn in market capitalisation. The stock ended the day 2.9 per cent lower."}],[{"start":53.44,"text":"Nvidia said on Monday afternoon that it has signed memorandums of understanding with the six Wall Street firms to “mobilise over $500bn of third-party capital for the build-out of AI infrastructure over time”."}],[{"start":66.8,"text":"Under the deal, which is still subject to final agreement, the firms will create dedicated pools of capital to finance Nvidia’s AI ambitions “at attractive rates for Nvidia customers”."}],[{"start":78,"text":"The partnership underscores Nvidia’s growing efforts to cultivate ties with Wall Street as a source of capital for itself and its clients to continue assembling the chips, power production and data centres at the heart of the AI boom."}],[{"start":90.48,"text":"“We continue to be enormous investors globally across the Nvidia ecosystem, and this announcement further underscores our confidence in their platform and the future of AI infrastructure,” said Jon Gray, president and chief operating officer of Blackstone."}],[{"start":105.64,"text":"Nvidia said the financing agreement was the first of its kind and would enable “AI infrastructure build-out across Nvidia’s ecosystem, including leading frontier AI labs, enterprises and AI clouds”."}],[{"start":117.4,"text":"“We began by building chips; today, we are helping create a new class of productive, investable infrastructure: AI factories,” Jensen Huang, founder and chief executive of Nvidia, said in a news release on Monday afternoon."}],[{"start":131.16,"text":"The $5.26tn company has positioned itself at the centre of the AI boom, providing chips, infrastructure and software to a wide array of partners developing the technology. Nvidia’s graphics processing units, or GPUs, underpin most of the leading US AI models available today."}],[{"start":149.4,"text":"The chipmaker often provides financial backing to help its AI partners raise debt in capital markets, which helps boost Nvidia’s own revenue. However, the circular nature of such transactions has raised concerns about concentrated risks in the sector."}],[{"start":164.16,"text":"Separately, Nvidia was in talks to provide a massive guarantee for a 10-gigawatt data centre project in Ohio leased to OpenAI, according to a person familiar with the matter."}],[{"start":null,"text":"

"}],[{"start":174.52,"text":"It also shows how Nvidia is building relationships with the giants of the private capital industry, which are collectively preparing to invest trillions of dollars of their insurance, retail and institutional investor assets into AI infrastructure."}],[{"start":187.88,"text":"In recent years, private capital groups such as Apollo and Blackstone have assembled AI infrastructure deals to assist companies including Anthropic finance their heavy spending on chips and data centres. They have also pioneered the creation of multibillion-dollar, investment-grade-rated financings for companies such as Meta and Intel, which sit off their corporate balance sheets."}],[{"start":209.16,"text":"Nvidia has been the biggest beneficiary of an explosion of interest in AI, which has seen demand for the group’s newest hardware vastly outpace supply. Chips account for the bulk of the cost of new computing capacity."}],[{"start":221.92,"text":"The company’s market capitalisation has increased 15-fold since the end of 2022, shortly after the release of OpenAI’s ChatGPT."}],[{"start":230.72,"text":"The biggest cloud-computing companies, including Meta, Oracle, Microsoft, Alphabet and Amazon, have dramatically increased their spending on AI infrastructure as they look to win the race to dominate the emerging technology. Morgan Stanley projects so-called hyperscalers will spend $3.5tn between 2026 and 2028."}],[{"start":251.22,"text":"That need for capital has forced technology groups to tap every source of cash they can find, including public equity, investment-grade and high-yield bonds, securitised debt, private credit and project finance markets."}],[{"start":263.28,"text":"“[The] sheer size of the AI infrastructure build-out is unprecedented,” Jim Zelter, president of Apollo, said on an earnings call earlier this month. “More than $8tn of capital is expected to be invested, a staggering sum. We see an enormous opportunity for private capital to finance a portion of this along with public capital.”"}],[{"start":288.12,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1786410410_2776.mp3"}