CALIFORNIA: US investment giants including Apollo Global Management Inc, Blackstone Inc, BlackRock Inc and Brookfield Asset Management are partnering with Nvidia Corp to invest US$500bil in artificial intelligence (AI) infrastructure.
The coalition, which also includes Goldman Sachs Group Inc and KKR & Co, will “create dedicated pools of capital at significant scale at attractive rates for Nvidia customers”, according to a statement on Monday.
Nvidia chief executive officer (CEO) Jensen Huang said in a CNBC interview that he approached only the six firms for the commitment, and none turned him down.
The effort comes with a huge headline figure, but few details on the timing and structure of the financings, or how much the plan goes beyond the string of AI deals that are already driving a large chunk of Wall Street’s biggest transactions.
Executives indicated it will focus on debt financing to provide access to computers for Nvidia’s largest customers and that there are already deals in the works that would qualify toward this commitment.
“We are bringing the world’s leading long-term capital providers together to independently underwrite AI infrastructure. These financing platforms will help customers access scarce computers at scale and build AI factories that will power every industry and country in the age of AI,” Huang said in the statement.
Nvidia has already inked hundreds of billions of dollars worth of deals with companies across the AI ecosystem, stoking concerns from some investors that the chipmaking giant is inflating demand and valuations across the industry through the circular nature of such agreements.
Now, the firm is publicly tapping the biggest private markets firms to provide funding for its customers amid the trillions of dollars that are expected to be needed for the data centres (DC), power stations and chips that will power the next era of AI.
The money will all be third-party capital, Huang said in the CNBC interview, which also featured executives from each of the six Wall Street firms.
BlackRock CEO Larry Fink said on CNBC the future deals will offer “high credit quality” and allow attractive yields in debt for investors who are “overinvested in equities”.
“It’s a big infrastructure build, and the capital markets are signalling that there’s lots of capital available to support it,” Goldman Sachs CEO David Solomon said, adding that his firm is trying to find different ways of “getting the capital to the right places to extend this or accelerate this”.
Nvidia had been in talks to backstop as much as US$250bil to help OpenAI lease computing power from the US$500bil, 10-gigawatt DC hub that SB Energy, a SoftBank Group Corp subsidiary, is developing in Ohio, Bloomberg had reported.
It would easily be among the chipmaker’s biggest financing deals with a customer. Nvidia was also in discussions to finance US$350bil of OpenAI’s purchases of its chips for the project, people familiar with the situation said at the time, asking not to be identified as the talks were private.
Wall Street firms have similarly poured hundreds of billions of dollars into financing the worldwide AI DC boom, directly investing in sites and buying the companies that operate them.
Two years ago, firms like BlackRock, Microsoft Corp and the United Arab Emirates’ MGX investment vehicle formed what’s now known as the AI Infrastructure Partnership to bankroll DCs. Nvidia committed to supporting the coalition.
Nvidia has accelerated its investments and partnerships with tech and AI companies in recently despite growing concerns about its “circular” deals. — Bloomberg
