On Monday, Nvidia plummeted, and hardware stocks across the entire U.S. market were also falling. The main concern was that Nvidia set up a $500 billion financing platform, which triggered worries in the market, as if “stepping with the left foot on the right.”
Here’s what’s going on. Nvidia teamed up with several financial institutions to create a platform. Customers can finance and take out loans against Nvidia’s GPUs. If there’s a default, Nvidia will help cover the risk, which is why those financial institutions agreed to get involved.
For Nvidia, it’s a no-risk deal: the only thing it “puts up” is the credit backed by its trillion-dollar market value. In return, it can sell more chips and also set financial pricing for its refurbished chips.
For customers, buying GPUs is already a major capital expenditure, but banks don’t recognize this asset, so they can’t do financing—meaning their capital is constrained.
It sounds great, but the only downside is whether the chip’s value can be used as collateral like a house, or else it’s just another bubble. That’s exactly what the market is worried about.
In response, Jensen Huang specifically posted an explanation. Regarding “revolving financing,” he said the reason for bringing in financial institutions is to avoid getting trapped in revolving financing.
Actually, this platform has another advantage: it addresses the North American big companies’ issues in financial reporting regarding GPU depreciation and valuation. Right now, the market isn’t buying the story mainly because AI hasn’t produced any more concrete, real-world outcomes beyond large language models. But if there are breakthrough applications or robots down the line, then the value of GPUs can be reflected more tangibly.
Over the years, Mr. Huang has been extraordinarily strong with every step. If you’re interested, you can check out “Jensen Huang: The Biography.” Back then, to lay the groundwork for the CUDA architecture, he spent countless amounts of money, which ultimately led to a breakout period.
Now Nvidia has even bigger ambitions. It’s no longer satisfied with being just a chip-making company, and it even goes beyond data centers. Their current goal is to price computing power—making computing power into a kind of currency—essentially, in a side way, an “ink-press machine” in the AI era.
$NVDAB $MUB $SKHYNIX
Here’s what’s going on. Nvidia teamed up with several financial institutions to create a platform. Customers can finance and take out loans against Nvidia’s GPUs. If there’s a default, Nvidia will help cover the risk, which is why those financial institutions agreed to get involved.
For Nvidia, it’s a no-risk deal: the only thing it “puts up” is the credit backed by its trillion-dollar market value. In return, it can sell more chips and also set financial pricing for its refurbished chips.
For customers, buying GPUs is already a major capital expenditure, but banks don’t recognize this asset, so they can’t do financing—meaning their capital is constrained.
It sounds great, but the only downside is whether the chip’s value can be used as collateral like a house, or else it’s just another bubble. That’s exactly what the market is worried about.
In response, Jensen Huang specifically posted an explanation. Regarding “revolving financing,” he said the reason for bringing in financial institutions is to avoid getting trapped in revolving financing.
Actually, this platform has another advantage: it addresses the North American big companies’ issues in financial reporting regarding GPU depreciation and valuation. Right now, the market isn’t buying the story mainly because AI hasn’t produced any more concrete, real-world outcomes beyond large language models. But if there are breakthrough applications or robots down the line, then the value of GPUs can be reflected more tangibly.
Over the years, Mr. Huang has been extraordinarily strong with every step. If you’re interested, you can check out “Jensen Huang: The Biography.” Back then, to lay the groundwork for the CUDA architecture, he spent countless amounts of money, which ultimately led to a breakout period.
Now Nvidia has even bigger ambitions. It’s no longer satisfied with being just a chip-making company, and it even goes beyond data centers. Their current goal is to price computing power—making computing power into a kind of currency—essentially, in a side way, an “ink-press machine” in the AI era.
$NVDAB $MUB $SKHYNIX