The money flows in a circle: Nvidia backs an AI lab, the lab builds a data center, the data center buys Nvidia chips, and the revenue funds the next round. Chief financial officer Colette Kress spelled out the mechanics on the company’s earnings call and made no apology for them.
Six investment firms are now partners in the loop, including Apollo Global Management, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR. Together they are raising more than $500B of outside capital for labs to build with, Kress said. Nvidia secured land, power and building capacity with SB Energy that will host only Nvidia equipment, with the first phase of 4.25 gigawatts earmarked for OpenAI, whose existing and planned commitments she put at around 12 gigawatts of Nvidia compute through 2030.
For smaller cloud operators the model is different: Nvidia promises to rent part of their capacity itself, giving lenders a guaranteed income stream, and takes a cut of earnings above that floor. Kress acknowledged Nvidia gets paid twice, on the equipment and again on rental income, while arguing chips only go to investment-grade customers and hardware can move to another buyer if one fails.
Margins are feeling the strain. Nvidia guided down to 74 percent this quarter and 71 to 72 percent in the fourth, with memory prices climbing faster than expected.
