‘That Nvidia guarantee is not worth what it was worth a week ago’: What Jensen Huang’s exit means for neoclouds
“If the capital providers now say that Nvidia guarantee is not worth what it was worth a week ago, that puts those neocloud businesses at risk,” Kaiser said.
Key points
- It’s because they know that there’s an Nvidia backstop, a written backstop, behind it, and so it lowers the risk, and then obviously lowers the interest rate.” CoreWeave carried $35 billion in debt at the end of June, and lenders had grown wary of businesses that depend wholly on AI demand, well before Huang left.
- How Nvidia props up the neoclouds Nvidia designs the chips that most AI models are trained on, and Taiwan’s TSMC manufactures them, and that’s a problem.
- Neoclouds such as CoreWeave and Nebius buy those chips by the hundreds of thousands, fill data centers with them and rent the computing power to AI labs and other companies, competing with Amazon, Google and Microsoft.
Jensen Huang’s resignation from Nvidia hits the AI industry’s most indebted borrowers hardest, according to one investor who backs AI infrastructure.
Additional details
- “The chip isn’t what puts them at risk, but it’s the financial backstop that allows CoreWeave or Nebius to go get those hundreds of millions of dollars of debt from Blackstone and Brookfield,” Kaiser told Fortune.
- “At the end of the day, this is a heavy-asset, infrastructure-based industry.” The winners and losers OpenAI and SoftBank’s SB Energy may be the biggest beneficiaries of Nvidia’s backstops, with CoreWeave and Nebius close behind.
- “If Nvidia no longer has Jensen as its rainmaker, did that just tip the scale towards using specialized chips?” Kaiser said.
- Nvidia itself lost about $450 billion in market value in the days after Huang admitted the affair, before Thursday’s drop.
- There, buyers are weighing Nvidia’s general-purpose chips against cheaper ones built for specific jobs: Qualcomm for robotics, Cerebras, Etched, Google’s TPUs and Amazon’s Trainium.
How this summary was made: extractive summary — built from the sources' own reporting. It is drawn only from the reporting of the sources listed below — read the originals for full detail. How we summarize →
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