Jensen Huang built Nvidia into the world’s most valuable company by pioneering the specialized chips powering the artificial intelligence boom. Now, to keep his broader vision intact, the Nvidia founder is attempting a very different kind of engineering: persuading Wall Street that those chips function as durable financial assets, comparable to commercial real estate or toll roads, rather than fast-depreciating hardware, according to a report from CNBC.
That bet hinges largely on Nvidia staying ahead of China’s own AI development.
This week, Nvidia announced agreements with six of the world’s largest asset managers, BlackRock, Blackstone, Apollo, KKR, Brookfield and Goldman Sachs, aimed at assembling a $500 billion financing pipeline. The money would help fund data centers and GPU clusters for companies that lack the credit standing or cash on hand to purchase millions of dollars’ worth of chips outright.
Central to the plan, which Huang unveiled alongside leaders from all six Wall Street firms, is a critical assumption: that Nvidia’s graphics processing units will retain their value over time, behaving more like traditional physical assets than typical fast-depreciating consumer electronics.
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“Nvidia’s AI factory platform is really an investable asset, an infrastructure asset,” Huang said. “The reason for that is because it’s productive, it’s revenue generating, it is fungible, it’s used by just about every cloud service provider, it runs every AI model.”
In conventional asset-backed lending, banks extend credit because if a borrower defaults, they can repossess the physical collateral, whether a building, a warehouse or a cargo ship, and sell it to recover their money. Such assets typically have established secondary markets and can remain useful for decades.
The productive lifespan of cutting-edge GPUs, however, remains far less certain. New chips generally power the training of frontier AI models, but within a few years get relegated to lower-margin inference tasks, a shift that directly affects their resale value and their usefulness as loan collateral.
“Depreciation is the one key risk here,” said Ben Emons, founder of FedWatch Advisors, who previously structured similar asset-backed loans at IndyMac before working as a portfolio manager at Pimco. Nvidia’s chips, he said, “could depreciate faster than expected.”
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Emons said he views China as the single biggest threat to Nvidia’s financing model, given the country’s rapid buildout of domestic compute capacity and the possibility that it could flood the global market with low-cost silicon in a price war.
Should Chinese production push hardware prices into a sharp decline, the collateral backing hundreds of billions of dollars in private loans could lose value far faster than the terms of the underlying debt would account for, according to Emons, leaving investors exposed to potentially significant losses.
That uncertainty could also push borrowing costs higher, with some estimates suggesting investor yield demands could climb to between 11% and 17% given the elevated default risk. Nvidia, for its part, maintains that consistent software updates help preserve the long-term value of its chips even as newer hardware generations arrive.
Ultimately, the question markets will need to price in is how long Nvidia’s chips remain productive enough, and generate enough revenue, for the underlying financial math to hold up.
