Nvidia financed GPU buyers to sustain demand, report alleges

Nvidia allegedly invested in AI startups and smaller cloud providers to create buyers for chips it risked being unable to sell. A Wall Street Journal report, relayed through Wccftech by TechPowerUp on November 13, describes a demand-support strategy that drew objections from finance chief Colette Kress over the arrangements and customers’ ability to pay.

The reported investment push followed a shift among large AI infrastructure companies away from ready-made components toward custom solutions. Jensen Huang sought further investments in smaller cloud providers as Nvidia allegedly faced a large incoming supply of GPUs from TSMC without immediate buyers.

The alleged purpose was to move that excess supply while preserving the perception of strong demand. The financing ran in a circle: Nvidia put money into prospective customers, which would then buy its GPUs and build data centers.

At an August meeting with Huang and senior finance staff, Kress reportedly urged Nvidia to reduce its circular-financing agreements. Her objections also reached what the report describes as Nvidia’s $250 billion deal with OpenAI, which she wanted scaled back.

Huang allegedly responded to her push to reduce the OpenAI commitment by calling her a “deer in the headlights.” The reported exchange places the disagreement inside Nvidia’s senior finance team, with its chief financial officer arguing for less exposure to the arrangements.

Kress’s reported concern extended beyond how many chips Nvidia needed to sell. Some smaller cloud providers receiving its investment allegedly could not afford its GPUs, raising the risk that the companies being funded to become customers would themselves become financial dead ends.