This article has been reviewed according to Science X's editorial process and policies. Editors have highlighted the following attributes while ensuring the content's credibility: Imagine a company that sells you equipment, invests money in your business and then rents back what you build with it. It's your supplier, your investor and your customer all at once.
Many artificial intelligence (AI) companies, including Microsoft, Amazon, Google and Nvidia, have adopted a version of this opaque method of financing. A chip supplier invests in a customer such as a data center builder, the customer spends the money on the supplier's chips, and both companies report growth. One central bank analysis found that 55.2% of investments in AI firms came from other AI firms.
What's not clear to investors or the market is how much of this AI boom is being driven by real, end-user demand—and how much might be a bubble. The world's leading chipmaker is investing in ChatGPT owner OpenAI to support data centers filled with Nvidia chips. Nvidia will invest US$30 billion in a private funding round for OpenAI and provide a guarantee of up to US$105 billion for an OpenAI data center in Ohio.
It will also invest in the company building it. That helps OpenAI remain Nvidia's best customer, but it also raises the question: Is the chipmaker propping up the market? Nvidia has invested in other AI firms as well, including up to US$10 billion in Anthropic, the developer of Claude.
It bought US$2 billion in shares in cloud provider CoreWeave to help it speed up the build-out of AI factories that use Nvidia technology. In total, Nvidia made more than 50 different investment deals in AI companies in 2024 alone. Some of those deals are staged over years or still open-ended.
But these circular deals help the AI build-out move faster than it could without Nvidia's financing. Data center builder Firmus—which last week abandoned plans to list on the Australian Securities Exchange—provides the local example. Nvidia wears all three hats for Firmus: Discover the latest in science, tech, and space with over 100,000 subscribers who rely on Phys.org for daily insights. d research that matter—daily or weekly.
Extract — continue reading at the source.
