Nvidia CEO Jensen Huang used an appearance on CNBC’s Mad Money to answer criticism over the company’s growing role in financing the AI ecosystem, saying detractors are overlooking how capital-intensive the sector is.
Huang says AI startups need unusually large amounts of capital
According to Huang, this first generation of AI startups needs billions of dollars just to begin operating, and hundreds of billions more before reaching profitability. He said the development and deployment of AI systems inherently requires large sums of money.
Nvidia has invested in model developers including OpenAI and Anthropic, along with newer cloud service providers that rent out Nvidia computing power. The company has also provided funding support for data center projects. Huang said Nvidia is supplying $105 billion in support for a large compute campus in Ohio leased by OpenAI. He added that the company is also working with major Wall Street financial institutions to arrange up to $500 billion in financing for data centers.
Critics compare the structure to “circular financing”
Some critics argue that these arrangements resemble “circular financing,” in which a company provides funding to customers and those customers then use part of that money to purchase its products. In that view, the structure could artificially support demand and revenue.
Huang rejected that criticism. He said frontier AI labs are a “once-in-a-generation” investment opportunity, and that Nvidia wants to be both an equity investor and a partner to those companies while helping them build and expand ecosystems on Nvidia’s platform.
Nvidia says risk is low because infrastructure can be reassigned
Huang also said many of these companies do not currently have investment-grade credit and lack the financial track record needed to raise capital at lower cost, which is where Nvidia can help.
Even if one of the supported companies runs into operating difficulty, Huang said the underlying compute infrastructure can still be shifted to other customers and workloads. On that basis, he said Nvidia’s risk is very low and that the investments are expected to generate substantial returns.