NVIDIA is discussing with insurance companies to provide insurance for GPU-backed mortgages, helping small AI cloud providers finance the purchase of chips 🧐
These firms need to buy GPUs first, build clusters, and then gradually recoup their investment by renting out computing power.
When funding is insufficient, they use GPUs as collateral to borrow money.
What lenders are worried about is that if the borrower defaults, the resale value of the old GPUs may not be enough to repay the loan.
The solution NVIDIA is discussing is to have insurance companies cover part of the losses as agreed, thereby increasing lenders’ willingness to issue loans.
At present, the talks are still in the early stages and nothing has been finalized.
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Previously, Coatue and MatX discussed financing to support storage procurement and capacity. This shows that the financialization of AI hardware is moving forward.
The equipment value of GPUs and rental income are being used to support loans, and the storage supply chain related to HBM has also started exploring capacity financing.
Bringing in financial capital could turn potential demand into actual orders, and it may also make industry sentiment increasingly dependent on financing conditions.
When credit is easy, companies can purchase in advance.
Once computing rental rates and equipment residual values decline, both customers’ repayment ability and the collateral value may deteriorate at the same time, tightening loans would in turn affect new orders.
If NVIDIA needs to participate in providing guarantees, it would also face potential payout liabilities.
But I still want to bet on NVIDIA.
$NVDA
These firms need to buy GPUs first, build clusters, and then gradually recoup their investment by renting out computing power.
When funding is insufficient, they use GPUs as collateral to borrow money.
What lenders are worried about is that if the borrower defaults, the resale value of the old GPUs may not be enough to repay the loan.
The solution NVIDIA is discussing is to have insurance companies cover part of the losses as agreed, thereby increasing lenders’ willingness to issue loans.
At present, the talks are still in the early stages and nothing has been finalized.
——————
Previously, Coatue and MatX discussed financing to support storage procurement and capacity. This shows that the financialization of AI hardware is moving forward.
The equipment value of GPUs and rental income are being used to support loans, and the storage supply chain related to HBM has also started exploring capacity financing.
Bringing in financial capital could turn potential demand into actual orders, and it may also make industry sentiment increasingly dependent on financing conditions.
When credit is easy, companies can purchase in advance.
Once computing rental rates and equipment residual values decline, both customers’ repayment ability and the collateral value may deteriorate at the same time, tightening loans would in turn affect new orders.
If NVIDIA needs to participate in providing guarantees, it would also face potential payout liabilities.
But I still want to bet on NVIDIA.
$NVDA