Nvidia's circular financing: what the WSJ reported about guarantees for chip buyers
SummaryNvidia weighed billions of dollars in guarantees for customers that couldn't afford its chips, and Colette Kress, now interim CEO, pushed to rein some of them in, the Wall Street Journal reported.
· MODEL Editors · 1 min read
Some links may be affiliate links. Disclosure
What happened. Nvidia considered billions of dollars in financial guarantees for cloud providers and data center developers that couldn't afford its chips, the Wall Street Journal reported in a profile of Colette Kress, Nvidia's CFO since 2013 and now its interim CEO (Business Today (opens in a new tab)).
The pushback. According to the Journal, Kress questioned how Nvidia should pick companies for these guarantees and calculate the returns. In an August meeting with senior finance executives, then-CEO Jensen Huang reportedly called her "a deer in the headlights." Huang was also worried that big cloud customers were exploring other chips while Nvidia's commitments to buy chip wafers and memory were coming at him like an "avalanche" (VideoCardz (opens in a new tab)).
The OpenAI deal. The Journal earlier reported that a planned guarantee for an OpenAI data center campus in Ohio was cut from $250 billion to less than $120 billion to address investor concerns about Nvidia's risk exposure (WSJ (opens in a new tab)). Kress helped cut that commitment, and the smaller agreement was signed on Aug. 17, per the WSJ profile. Nvidia then paused some financing deals and told customers they would face more executive and board scrutiny.
The quote. Kress has defended the investments publicly: "We recognize the scale of this support, and we know some will call this circular financing. We see it differently." She said returns on invested capital would be excellent (Business Today (opens in a new tab)).
What's next. Kress stays CFO while serving as interim CEO, and the board is considering internal and external candidates for a permanent chief executive. $NVDA closed at $162.85 on Friday, Nov. 13 (Yahoo Finance, checked Saturday 12:35 PM PT).
The MODEL take. For anyone building on GPU clouds: when a chip supplier is guaranteeing your provider's loans, it's worth asking what happens to your capacity if those guarantees get paused.
Not tested by MODEL. Not sponsored. Not investment advice.
Get three tested tools every Friday
Free, weekly. Unsubscribe anytime.
Sources
- Nvidia interim CEO Colette Kress challenged Jensen Huang's AI financing bets before his exit
Business Today (citing the WSJ)
- Nvidia Downsizes Plans for $250 Billion Guarantee of OpenAI Data Center
The Wall Street Journal
- NVIDIA reportedly financed AI companies unable to afford its GPUs
VideoCardz (citing the WSJ)
Keep reading
AI labs
OpenAI folds its robotics team into the rest of the company, leaving booth #208 bare
OpenAI reorganized its stand-alone robotics team so recently that its booth at a top robotics conference had no logo, display or demo, Fortune reported. OpenAI says it's speeding up robotics, not retreating.
· MODEL Editors
Tech news
SpaceX caught a Starship upper stage with its launch tower for the first time
On Starship Flight 15, the ship spent about 22 hours in space, orbited Earth 14 times and came back to be caught by the tower's 'chopstick' arms at Starbase, Texas. The booster did not make it back.
· MODEL Editors
Tech
Workday's Friday outage started with a backup test. Here's what is confirmed
Workday, the HR and payroll platform used by more than 11,500 organizations, put some customer systems into maintenance mode on Friday, Nov. 13, after a problem found while testing its backup systems left some data in an inconsistent state.
· MODEL Editors
Tech
Meta is testing Takes, a prediction app where employees bet 'cred' instead of cash
Meta employees have started testing an internal prediction-market app called Takes. Wagers are made in points called cred, short for credibility, not real money, the Wall Street Journal reported.
· MODEL Editors
FREE · EVERY WEEK
The top AI tools this week, tested.
Every week MODEL's editors pick the AI tools worth your time, try them hands-on, and tell you what's good, what's not, and who it's for. Free, in your inbox.
Free. Unsubscribe anytime. Our picks are editorial and can't be bought.