Nvidia and six Wall Street giants team up to raise $500bn for AI infrastructure

[Finley_27]

Nvidia has struck deals with six of Wall Street's largest financial institutions, Apollo Global Management, BlackRock, Blackstone, Brookfield Asset Management, Goldman Sachs and KKR, to mobilise 500 billion dollars in third party capital specifically to fund artificial intelligence infrastructure, marking what several of the executives involved described as the first time AI compute itself is being treated as a genuine investable asset class

Nvidia CEO Jensen Huang framed the underlying logic plainly, saying in AI, compute is revenue, and that the company is bringing the world's leading long term capital providers together to independently underwrite AI infrastructure, he told CNBC he approached only these six firms for the commitment and none turned him down, the financing will use compute power itself as collateral, structured through private offerings and bonds issued by special purpose entities capable of raising tens of billions of dollars at a time, with Goldman Sachs, the only bank in the coalition, positioned to lead public debt deals while also distributing investment returns through its own asset management arm

The Wall Street executives involved offered genuinely striking framing of their own for why they're getting involved this way, Blackstone's Jon Gray said demand for AI is outstripping supply, with usage at Blackstone's own portfolio companies surging sevenfold this year alone, and compared AI compute to how mortgage lenders assess homes, a financeable asset class in its own right, BlackRock's Larry Fink went further, calling this the start of the next future for financial engineering, explicitly comparing it to the creation of mortgage backed securities back in the 1970s, and saying the US needs to raise this money as fast as possible because he believes it's imperative that America leads AI globally

KKR co-CEOs Joe Bae and Scott Nuttall offered a notably candid assessment of the actual challenge ahead, saying compute has become a critical infrastructure asset, and that as they've scaled their approach to digital infrastructure, they've learned that delivery, not ambition, is the hard part, the money raised will fund construction of new data centres to house, operate and cool the stacked computer chips that process AI workloads, as well as new factories to manufacture the chips themselves and increase their availability to buyers

This isn't happening in isolation either, essentially every major technology and AI company, Google, Meta, Amazon, Microsoft, SpaceX, Tesla, OpenAI and Anthropic among them, uses Nvidia's chips, and those companies have collectively spent over 1 trillion dollars in just three years on AI projects and infrastructure, demand that has driven Nvidia's own stock market value up fivefold over that same period, but not everyone is entirely convinced the enthusiasm is fully justified, Jane Sydenham, senior investment manager at Rathbones, told the BBC that while Nvidia clearly needs to keep facilitating AI's growth, the worry is that more and more money is going into these projects, and whether they're all going to earn the right return for the future remains a genuinely open question

Nvidia gets $500bn from Wall Street giants to develop AI projectswww.bbc.co.uk