NVIDIA Corporation(NVDA.US) $500 Billion AI Financing Deal Retrospective: Six Wall Street Giants Join, Zero Signed Contracts Announced, Guarantees Up to 25% Residual Value of Its Own Chips

In mid-August, Goldman Sachs Group, Inc., Blackstone, and Apollo were secretly working on a debt financing plan for AI developers to purchase NVIDIA Corporation (NVDA.US) chips. As progress stalled, NVIDIA Corporation CEO Jensen Huang chose to make the effort public: six institutions collectively aiming to provide financing for a $500 billion AI computing deala round number whose origins were not entirely clear. One month later, the deal has become clearer. **Months of Secret Planning and a Last-Minute "Addition"** A behind-the-scenes retrospective shows that the hype was backed by a hastily assembled encirclement: the debt plans from Goldman Sachs Group, Inc., Blackstone, and Apollo were slow to materialize, so Huang changed strategy and announced first. The move was intended to reassure NVIDIA Corporation investorsthat a large number of deep-pocketed institutions were ready to finance its customers, especially key AI startups like Anthropic and OpenAI that are crucial to NVIDIA Corporation's future demand. Huang is broadly bullish on AI spending, but NVIDIA Corporation has been seeking to expand its customer base beyond hyperscalers like Microsoft Corporation and Amazon.com, Inc.many of which are developing their own chips. Huang also wanted something else. After months of working with the three Financial Institutions, Inc., the $5.5 trillion market-cap company called the original team days before the announcement to inform them that KKR, BlackRock, Inc., and Bruker Corporation Field would also join, committing to finance a portion of the debt. Once the partnership was made public, some of Wall Street's largest institutions would be ready to arrange hundreds of billions of dollars in financing for chip deals at any time, with NVIDIA Corporation itself providing guarantees for a portion of the transactions. But according to people familiar with the matter, no deal had been signed at the time of the announcement, which was deliberately kept vague. **Bond Market Spooked Then Steadied: The August 10 Red Candle** Investors have long worried that NVIDIA Corporation and others are inflating an industry bubble through "circular financing"NVIDIA Corporation has invested in its own customers such as CoreWeave, and such deals have intensified concerns. The initial description of the financing arrangement unsettled debt investors, who feared it would saddle the chipmaker with higher leverage exposure; concerns eased as Huang clarified that NVIDIA Corporation's support would be capped at 25% of any single opportunity and assessed case by case. The market's first reaction was "shock" rather than pleasant surprise: on August 10, the day of the announcement, NVIDIA Corporation shares fell more than 3% intraday and closed down 2.86%, stabilizing the next day; its 5-year CDS, a measure of credit risk, rose to 77.2 basis points at one point, the largest single-day increase in two weeks. Since late May, the cost of default insurance on NVIDIA Corporation debt has nearly doubled. Huang promptly publicly denied that the arrangement constituted circular financing: "This initiative is intended to eliminate market concerns. We are bringing independent long-term institutional capital into the AI infrastructure market." He stressed that demand is real and that capital providers will underwrite each project independently. Some media calculated on this basis: if the $500 billion financing target is fully realized, NVIDIA Corporation may need to deploy up to $125 billion of its own funds as a backstop. **"Debt Showcase": Zero Signed Deals, No Timetable** Afterward, Huang and executives from the six institutions appeared on CNBC to promote the arrangement. The program ran more than 30 minutes but offered few new details: Goldman Sachs Group, Inc. CEO David Solomon, Blackstone President Jonathan Gray, Apollo President Jim Zelter, and Bruker Corporation Field CEO Bruce Flatt appeared in the studio, KKR Global Head of Digital Infrastructure Waldemar Szlezak was at the same table, and BlackRock, Inc. CEO Laurence Fink joined by video due to travel. In the interview, Huang said, "In AI, compute is revenue," marking the first time a technology chip has become an investable asset class. The executives then turned to clients such as sovereign wealth funds, pensions, and insurance institutions to gauge their willingness to buy the related debt; they disclosed in the TV discussion that some funds could come from retail investors. The $500 billion commitment has no set timetable; it is a combination of deals already discussed and projections of near-term demand, and each institution can review customer creditworthiness on its own before committing. Most of the financing will come from the private credit market, but the sheer size will inevitably require the public marketexpected in the form of bonds issued by special purpose vehicles (potentially reaching tens of billions of dollars per deal), which will lease chips to NVIDIA Corporation customers. A person involved in the announcement described Huang's intent as building a "debt showcase" to advertise to customers and worried investors; if the deals fail to materialize as announced or something goes wrong, the reputations of both the financing partners and NVIDIA Corporation will be at risk. **The Residual Value Guarantee Gamble: The MBS Analogy and the Depreciation Debate** More specifically: NVIDIA Corporation is guaranteeing a portion of the residual value of the chips installed in these projects, capped at 25% of a single transaction and assessed project by project; if the resale or reuse value of the hardware at the end of the financing term is lower than expected, NVIDIA Corporation fills part of the gap. Huang called this ratio "significantly lower" than other compute financing arrangements, and credit assessment of customer creditworthiness, demand, utilization, and residual value remains with the capital providers. Fink's analogy was the boldest: this is like "the beginning of the mortgage-backed securities market in the 1970s," "the next future of financial engineering." The metaphor is a double-edged swordMBS later became the epicenter of the 2008 financial crisis because the underlying collateral was worth far less than assumed. The Verge also dug up old remarks: Huang said last year that after Blackwell ramped up, "Hopper couldn't even be given away"; and the $100 billion phased investment announced by NVIDIA Corporation and OpenAI in September 2025 remains an unfulfilled memoranduman MOU is not a done deal. Motley Fool's analysis hit the crux: GPUs are updated every one to two years, and if lenders lend on a seven-year term while the collateral becomes obsolete in three years, the economic model could quickly fall apart. Huang's response was aimed squarely at the bears. He said the A100, released in 2020, has now been in commercial use for six years and its economic life is trending toward ten years, with CUDA continuously improving the output of installed hardware; as market evidence, annual H100 contract rental rose from $1.70 per GPU hour in October 2025 to $2.35 in March 2026, while B200 compute prices range from $5.30 to $7.05. This stands in direct contrast to Michael Burry's depreciation warningthe latter accused hyperscalers of understating depreciation by about $176 billion in 2026-2028 and said GPUs' two-to-three-year upgrade cycle cannot support a five-to-seven-year depreciation schedule. Just on Monday, Burry turned his sights on the $573 billion AI financing network held by the insurance industry. deVere Group CEO Nigel Green's question was the most blunt: "If the market truly believed demand for NVIDIA Corporation chips was strong and durable, why would the company need to personally guarantee the resale value of its own hardware to reassure lenders? Confident sellers usually don't need to backstop financing for their own customers." He warned that structured financing relying on a single party's guarantee of an asset's future value has historically included some of the most destructive credit events in modern financial history. **Comparisons and the Queue: Broadcom Inc. Has $35 Billion in Hand, Morgan Stanley Follows with $1.5 Trillion** This high-profile campaign contrasts with a similar announcement by Broadcom Inc. weeks earlier. Broadcom Inc. designated Apollo and Blackstone as anchor investors to finance plans by frontier labs such as Anthropic and OpenAI to build more than 20 gigawatts of computing capacity by 2028, with potential demand in the hundreds of billions of dollars; but when Broadcom Inc. made its announcement, it already had $35 billion in financing in handBroadcom Inc. backstopped most of the debt in the first transaction to attract investors, while Apollo structured the borrowing off Broadcom Inc.'s balance sheet. Bloomberg previously reported that Blackstone had sounded out investors on another transaction exceeding $30 billion. For financing partners, the business means fees: Goldman Sachs Group, Inc. is the only one of the six with a dedicated investment banking division, and Apollo is also expected to unlock more fees after expanding its trading business. For Goldman Sachs Group, Inc., this is the culmination of years of groundworkJung Min, who was promoted last year to co-head of its technology, media, and telecommunications business, covered NVIDIA Corporation from San Francisco for years, and former Goldman Sachs Group, Inc. NVIDIA Corporation analyst Toshiya Hari joined NVIDIA Corporation's investor relations department last year. Even with all the questions, the queue keeps growing: JPMorgan is discussing how to participate (according to people familiar with the matter); minutes after the announcement, Morgan Stanley unveiled a framework to facilitate $1.5 trillion in funding for U.S. innovation and national security, with AI and advanced computing at the top of the list. Beyond Wall Street, the other end of this financing chain is also taking shape: Ares Management counts 26 disclosed AI-related financings totaling $573 billion over the past 12 months, a considerable portion of which will ultimately be held by the insurance industry. Apollo President Zelter estimates total global AI infrastructure investment demand at more than $8 trillion, Morgan Stanley expects hyperscalers to spend $3.5 trillion in 2026-2028, and the Bank of England's July Financial Stability Report warned that this pace is unprecedented and that a shock to highly leveraged AI companies could transmit to global financing conditions and trigger a credit crunch. Highline Asset Management analyst Ben Emons' comment may be the best footnote to the entire campaign: "This deal doesn't eliminate the compute shortageit financializes it."