Amazon Plans to Sell $8 Billion in Nvidia Chips to Investors
Amazon (AMZN) is taking steps to reduce its financial exposure to the AI chip market. The company reportedly plans to offload nearly $8 billion worth of advanced NVIDIA (NVDA) chips to investors through a special-purpose vehicle (SPV). This move would allow Amazon to continue investing in chips despite its current negative free cash flow situation.
The Financial Times reported that investors would hold SPVs containing Grace Blackwell chips operating in U.S. data centers. Meanwhile, NVIDIA is exploring ways to mitigate the risk of an AI slowdown by transferring capital-intensive chip financing to insurance firms and investors.
Treating GPU hardware as an asset class raises concerns. If the AI bubble bursts, older chips could depreciate sharply, leading to significant losses for SPVs and investors. High bond yields are already lowering the value of REITs, and a similar downtrend could occur for chip SPVs if AI spending slows.
Companies like SpaceX (SPCX), Meta Platforms (META), and CoreWeave (CRWV) have benefited from renting out their AI data farms at premium prices due to the current demand. However, the risk of a sudden collapse in AI chip demand remains a critical factor to monitor.