Nvidia Chief Executive Jensen Huang pushed back against criticism that the company's equity investments and financing support for customers amount to "circular financing," after the world's largest AI chipmaker posted quarterly revenue that more than doubled from a year earlier and beat market expectations. Huang said the support programs are not a gimmick to artificially inflate chip demand but create a virtuous cycle that drives growth.
Speaking on CNBC's "Mad Money" on the 26th, Huang stressed that the financial system has not kept pace with the growth of AI companies. "The critics are missing a very important point," he said, noting that these are the first generation of startups that need tens of billions of dollars to fund their businesses.
"There has never been a startup that needed billions of dollars to get started and tens of billions of dollars to become profitable," he said. "The business of building and deploying AI is inherently very capital-intensive." Huang added that AI companies do not have enough business financial history to raise funds at low cost, and that this is where Nvidia can help. The remarks were interpreted as meaning that Nvidia should fill the gap because AI companies lack the funds to secure the massive computing resources they need.
Describing OpenAI and Anthropic as "once-in-a-generation companies," Huang also made clear his intention to expand equity investments and financing support. "We want to be their investor, their supporter and their partner," he said. "The only thing I regret is that we didn't invest earlier and more."
Nvidia recently agreed to create a $500 billion AI infrastructure financing package with Wall Street firms including Apollo Global Management, Blackstone and Goldman Sachs. It also pledged more than $100 billion in funding for a data center project in Ohio that OpenAI will lease. The move broadens the scope of support beyond the direct equity stakes in major customers and revenue contracts tied to its own chips that the company has already pursued.
Market watchers have argued that this creates a circular structure in which Nvidia provides funds to customers who then use that money to buy Nvidia chips. Some have warned that Nvidia could take on those risks simultaneously if the AI investment boom cools or related demand wavers.
Nvidia flatly dismissed the concerns as manageable. Chief Financial Officer Colette Kress said investments and commitments to AI companies, at roughly $50 billion, represent only a small fraction of expected free cash flow. She argued that the potential returns could be larger given strong demand for computing resources and the business opportunities these companies will bring to Nvidia.
