Nvidia's AI Financing Guarantees Spark Credit Risk Fears
Nvidia's recent financial guarantees for its AI customers buying its chips has sparked concerns about credit risk and market collapse. The company now provides financing for its customers, which includes guaranteeing that some will pay even if they default on their loans.
Nvidia's revenue reached $96.22 billion in the second quarter, up 105.8%, driven by strong sales of its Blackwell Ultra chips to data centers and networking equipment. CoreWeave, a company that borrows to buy Nvidia GPUs and leases computing power, saw its revenue grow 112.3% to $2.58 billion.
However, CoreWeave's interest expense rose to $640 million from $267 million, and its net loss widened to $626 million. The company's debt costs are compounding its losses, with Q3 interest expense guidance ranging from $860 to $940 million.