Nvidia's stock fell more than 2% to about $218 on Monday, even as a reported $500 billion financing package for AI infrastructure moved closer to announcement. The deal, assembled by Apollo Global Management, Blackstone, BlackRock's Global Infrastructure Partners, Brookfield Asset Management, Goldman Sachs, and KKR, targets data centers, power plants, and chips. It could be announced within days, according to the Financial Times, which first reported the plan, and Reuters confirmed.
The $500 billion package
The financing package is still taking shape. The structure and Nvidia's exact stake haven't been disclosed. The companies involved are some of the biggest names in private equity and asset management. They're looking to fund the physical backbone of the AI boom: data centers, power plants, and the chips that run them. Nvidia itself has been raising money too. In June, it sold $25 billion in bonds, its first bond sale since 2021.
Why the stock didn't rally
The market's reaction was muted. Nvidia shares closed down more than 2% at about $218. That's despite the company's own moves to back AI infrastructure. Nvidia plans to invest up to $3 billion in Lancium, the power developer behind Texas' Stargate AI campus. It also backed Firmus' $2 billion raise at a $10.5 billion valuation. But some critics see a problem. They call Nvidia's financing of its own customers "circular financing." The worry is that it obscures real demand. If Nvidia is lending money to companies that then buy Nvidia chips, the sales numbers might look better than the actual market.
A cautionary tale from telecom
The pattern isn't new. In the late 1990s, telecom giants like Lucent and Nortel lent billions to customers to buy their equipment. When the dot-com bubble burst, those loans went bad and the companies suffered. The parallel is uncomfortable for Nvidia bulls. But the current situation is different in scale and structure. Still, the question of how much of Nvidia's growth is self-funded is one investors are starting to ask.
Analysts remain bullish
Wall Street isn't panicking. Of 37 analysts covering Nvidia, 36 rate it a Buy and one has a Hold. None say Sell. Price targets range from $250 to $500, with an average of $308.69. That implies about 49% upside from Monday's close. The next big test comes on August 26, when Nvidia reports quarterly earnings. Consensus expects about $91.8 billion in revenue and $2.08 in earnings per share, nearly double year-ago levels. Big Tech is set to spend more than $730 billion on AI this year, according to Reuters. And SpaceX has committed its AI systems exclusively to Nvidia's Vera Rubin architecture.
The financing deal could be announced within days. Nvidia's earnings follow on August 26. Until then, the circular financing debate isn't going away.
