Wall Street Questions Nvidia’s AI Chip Valuation in $500B Financing Plan
Wall Street lenders are questioning Nvidia’s valuation of its advanced AI hardware assets, creating friction over a $500 billion financing plan. The plan uses Nvidia’s AI chips as loan collateral for developers, but banks and investors are skeptical about the long-term value of these assets. Nvidia argues that its top GPUs can generate revenue for a decade, but lenders typically depreciate them over just three to four years. Some lenders want Nvidia to guarantee the residual value of all deals, while others suggest backing loans with payments from investment-grade customers.
Nvidia has pushed back, calling its AI compute a “productive, durable and fungible asset.” The company also cited studies showing cloud firms extending server lifespans to five or six years. However, lenders argue there isn’t enough historical data to support Nvidia’s claims. Despite the pushback, demand to finance these deals remains high, highlighting the market’s confidence in Nvidia’s business.
The company reported $96 billion in revenue last quarter and expects $108 billion next quarter. Management forecasts about 70% revenue growth by fiscal 2028, with supply, not demand, as the limiting factor. Nvidia has also invested nearly $50 billion in frontier AI labs, expecting these partnerships to account for a quarter of its business next year. Investors will be watching whether lenders accept the longer life span of Nvidia’s chips and how financing terms evolve.