Nvidia makes a lot of money from deals fueled by AI hype. It also spends a lot of money on deals that in turn fuel that same AI hype. But Nvidia executives want you to ignore how circular that might sound, because the companies they are investing in are going to “become the largest technology companies in history.”
Nvidia has woven a tangled, and some argue dangerous, web of deals with frontier AI companies, one in which the chipmaker is slowly evolving from being solely the main infrastructure provider of the AI industry towards being one of its biggest financiers. Some experts warn that the mounting deals worth billions of dollars each move cash in a circular fashion around the system, with Nvidia investing money into these frontier AI labs that then gets channeled back to Nvidia for chips. The financial dependencies could be skewing demand, critics warn, and concentrating risks, meaning that if one deal fails to pan out, it could create a domino effect that could even take down the entire American economy.
In a striking example of one such deal, Nvidia announced last week that it would help provide OpenAI a guarantee of up to $105 billion to finance a giant data center in Ohio, with the AI giant committing to using Nvidia chips in the center.
“We recognize the scale of this support, and we know some will call this circular financing. We see it differently,” Nvidia chief financial officer Colette Kress said in the company’s second quarter earnings call on Wednesday. “We believe these investments, measured against the strength of their demand, the business they create for us, the ecosystem they build on Nvidia’s platform and the equity returns on our invested capital, will be excellent, and our risk is limited.”
Earlier this month, Nvidia also announced that it was bringing together a handful of some of the weightiest names on Wall Street to invest $500 billion in AI infrastructure buildout. A key detail on those deals, though, is that they are currently comprised only of strings of memoranda of understanding (MOUs), meaning that they are non-binding. Nvidia also announced a very flashy yet non-binding $100 billion deal with OpenAI late last year, which first sparked the circular financing fears, but that deal ended up failing to materialize.
Those that would disagree with Nvidia’s take on the issue argue that the AI industry is smack dab in the middle of a ballooning bubble, and that if one of the companies Nvidia has decided to back fails to live up to expectations, it could lead to a broader pullback with possibly disastrous consequences.
Kress pushed back against those concerns, arguing that Nvidia is not as exposed to that risk as it may seem.
“The Nvidia compute platform is fungible and durable, and can be redeployed to support other customers,” the CFO said.
But the company’s business is undeniably intertwined with and dependent on the financial health of its top customers, the hyperscalers, some of whom saw record drops in cash flow this past quarter. Google, for example, reported its first negative free cash flow figure this past quarter since the tech giant went public back in 2004, driven by its massive AI spend.
Five customers accounted for 70% of NVIDIA’s accounts receivables at the end of Q2 FY27, and for some customers it’s allowing payment terms anywhere from 3 months to a year.
Up from 56% a year ago. pic.twitter.com/BIibFuiUOi
— Ed Zitron (@edzitron) August 26, 2026
While investors are left to ponder for another quarter whether Nvidia’s financial commitments are visionary or are simply financing AI hype into existence, the chipmaker is so far displaying no signs of slowing down. In its second quarter, Nvidia reported revenue of $96.2 billion, with the CFO projecting a revenue increase of a shocking 70% in the next fiscal year. Nvidia CEO Jensen Huang said on the call that the revenue increase would have been much higher had there not been supply constraints.
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