As six of Wall Street’s biggest financial institutions say ‘yes’ to Nvidia, company for the first time answers ‘circular financing’ accusations

US investment giants including Apollo Global Management, Blackstone, BlackRock and Brookfield Asset Management are partnering with chip giant Nvidia to source $500 billion in financing for artificial intelligence infrastructure. Nvidia announced partnerships with five of the biggest American financial institutions to establish independent financing platforms designed to mobilize hundreds of billions to support the buildout of AI infrastructure over time. This is a major milestone for Nvidia and the AI industry. The move highlights how surging demand for AI computing capacity is drawing ⁠institutional investors, as governments, companies and startups race to build out data centers to support AI workloads. The initiative is intended to broaden access to Nvidia-based infrastructure among frontier AI developers, enterprises, governments and ‌cloud ⁠providers, while creating longer-duration, usage-linked investment opportunities for large asset managers and private capital firms.The company also answered the common blame that any funding raised by some of the biggest AI companies, be it Nvidia, OpenAI, Oracle or Anthropic face — Circular Financing. For those unaware, Circular financing is a business arrangement where a company invests money in or extends credit to a partner, who then uses those exact funds to buy products or services from the original investor. This creates a self-reinforcing financial loop rather than relying entirely on independent external demand. In Nvidia’s case, Circular financing describes a loop where Nvidia invests in AI startups and data center projects, and those same entities use those funds to buy Nvidia’s high-end GPUs.

What Nvidia said on ‘circular financing’ accusations

The company replied to ‘circular financing’ accusations that are often raised about its funding. It answered the same in its blog post announcing the deal. The para is titled ‘The Important Questions: Is this circular financing?’“This initiative is designed to address that concern. We are bringing independent, long-term institutional capital into the AI infrastructure market. The demand is real: it comes from frontier AI labs, AI-native startups, enterprises, cloud providers and countries building AI services. The capital providers independently underwrite each project — including the customer, demand, utilization, cash flow and residual value. Nvidia provides the platform; the investors make independent financing decisions. This is the beginning of an open capital market for AI infrastructure.It goes on to add: ‘Why would Nvidia support financing?’ “In some cases, Nvidia may provide a residual-value support mechanism for up to 25% of an opportunity, assessed carefully on a project-by-project basis. That support is limited, residual-value based and designed to complement — not replace — independent underwriting. This is substantially lower than other compute-financing arrangements. Nvidia can provide support because the Nvidia compute is unique: it is fungible, universally adopted, software-upgradable and redeployable across a large ecosystem of customers. Our role is to help unlock a very large pool of independent capital while maintaining disciplined risk exposure,” said the post.

Answering the biggest AI worry: Return on investment

The blog post also talks about another AI worry: Return on investment. It says: “Companies are using AI to write software, discover drugs, design products, serve customers, automate operations and build new services. AI factories make this possible. More compute creates better AI; better AI creates more usage; more usage creates more revenue; and more revenue drives more compute. This is the virtuous cycle of the AI industrial revolution.“It adds, “Every industrial revolution has been built on infrastructure: electricity, transportation, communications and computing, with every buildout enabled by external financing. AI factories are the infrastructure of the intelligence era. With these partnerships, Nvidia and the world’s leading financial institutions are creating a new way to finance the infrastructure that will power this industrial revolution. We will make AI factories more accessible to the companies, industries and nations building the future.”