Nvidia's $500B AI data center financing plan faces risk from China chip competition

Nvidia has partnered with six major Wall Street asset managers, including BlackRock and Goldman Sachs, to establish a $500 billion financing pipeline for AI data centers. The plan treats GPUs as long-term infrastructure assets, with Nvidia guaranteeing up to 25% of their collateral value. However, this structure faces significant risks from rapid GPU depreciation and a looming supply threat from China, where Huawei is mass-producing its Ascend 950PR chips, potentially triggering a price war that could erode collateral values.

Nvidia $500B financing structure

• ▪Nvidia announced agreements with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR to establish compute financing platforms to mobilize over $500 billion for AI data centers and GPU clusters.
• ▪Goldman Sachs is positioned to serve as the lead bookrunner on public debt issuances, structuring and distributing special purpose entity bonds to institutional investors for the Nvidia compute financing platforms.
• ▪Nvidia CEO Jensen Huang announced the $500 billion financing plan during a CNBC segment alongside leaders of the six participating Wall Street asset management firms.

GPU collateral value assumptions

• ▪Fitch Ratings has been consulting publicly on GPU depreciation and whether it should be formally incorporated into ratings of securitizations backed by artificial intelligence infrastructure.
• ▪Nvidia CEO Jensen Huang argues that Nvidia's graphics processing units will hold their value over time, behaving like traditional hard infrastructure assets rather than fast-depreciating consumer electronics.
• ▪Nvidia argues its proprietary CUDA software layer continuously improves hardware performance after deployment, allowing older graphics processing units to stay productive and generate yield longer.

China domestic chip threat

• ▪Ben Emons estimates investors will demand high-yield returns in the 11% to 17% range on GPU-backed loans to compensate for standard depreciation and Chinese supply risks.
• ▪Ben Emons of FedWatch Advisors stated that the single biggest threat to Nvidia's financing model comes from China rapidly expanding domestic compute capacity and potentially flooding the market with low-cost silicon.
• ▪Bernstein Research forecasts that Nvidia's share of China's artificial intelligence chip market will fall from approximately 40 percent to roughly 8 percent by the end of 2026, while Huawei's share approaches 50 percent.
• ▪Huawei's Ascend 950PR artificial intelligence chip entered mass production in April 2026, capable of up to 2 petaflops of FP4 performance with 128 gigabytes of locally produced HBM memory.

Secondary GPU market strategy

• ▪An H100 GPU that traded at approximately $30,000 in 2023 was selling for roughly $8,000 by mid-2026, representing a decline of about 73 percent in three years.
• ▪Nvidia has agreed to guarantee that its chips used as collateral will retain value, promising to cover up to 25% of the difference if the hardware must be liquidated below book value.
• ▪Nvidia's H100 rental rates rose from roughly $1.70 per GPU-hour in late 2025 to about $2.35 per GPU-hour in 2026, driven by scarcity as hyperscalers build out capacity.

Lucent comparison concerns

• ▪Nvidia CEO Jensen Huang addressed circular financing concerns on X, stating that the new initiative is designed to bring independent, long-term institutional capital into the AI infrastructure market.
• ▪Critics have compared Nvidia's financing strategy to Lucent Technologies, the telecommunications provider that crashed after lending customers money to buy its own equipment during the dotcom bubble.

Circular financing risk

• ▪Nvidia has committed billions toward buyers of its chips, including OpenAI, Anthropic, CoreWeave, Nebius, Firmus, and Lambda, and worked on another $750 billion in circular deals in the summer of 2026.
• ▪Nvidia's guarantee to cover up to 25% of collateral value shortfalls creates 'wrong way' risk, where Nvidia's financial obligations will grow if overall demand for its chips weakens.