Inside Nvidia’s $500B AI Financing Loop

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**Jay Goldberg** (1:27)
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Exchanges on the economic impact of AI.
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**Ed Elson** (2:06)
Welcome to Prof G Markets, I'm Ed Elson. It is August 12th. Let's check in on yesterday's market vitals.
The major indices declined again. After another day without progress in Iran, Brent Crude climbed. The yield on Tenure Treasuries inched lower ahead of the next inflation report due this morning. And finally, Apple shares fell more than 1% on news that its head of Apple Pay is retiring.
Okay, what else is happening? Nvidia is joining forces with Wall Street in one of the most ambitious financing efforts ever attempted. On Monday, Nvidia announced memorandums of understanding with six major asset managers to secure half a trillion dollars to fund the AI build out. The firms will lend that capital to Nvidia's customers, helping them build more data centers and buy more chips. BlackRock CEO Larry Fink called the project the beginning of quote, the next future for financial engineering. And Nvidia CEO Jensen Huang said that AI chips have now become an investable asset class. However, Nvidia shares fell nearly 4% on the news, which was first reported by the Financial Times. Joining us to discuss this half a trillion dollar financing arrangement, we are speaking with Jay Goldberg, analyst at Seaport Global Securities. Jay, thanks for joining us on the show. I've been looking at this $500 billion deal.
I can't really tell what the deal actually is. There are a bunch of Wall Street banks and firms involved. It's a big number. But who's lending money to what? What is the financing package actually look like? What do we actually know about this?

**Jay Goldberg** (3:56)
We don't know a lot. There's a lot of unknowns in here.
They had a press release out yesterday.
And the press release was almost entirely sort of hagiographic quotes from all the participants about how great they all were. And then Jensen posted on Twitter today, gave a little bit more, a little bit of granularity to a couple of things. But we don't really know. And I think it's worth pointing out that in the press release, it actually is very clear that the agreements are not finalized. So they don't know what the details are yet.

**Ed Elson** (4:27)
Yeah, I mean, the term that jumped out to me was memorandum of understanding. I've heard that before in a deal with Iran that turned out to not be a deal and turned out to be a little bit of a disaster. Is that the right comparison here?

**Jay Goldberg** (4:42)
I will say that Nvidia had a similar MOU with OpenAI, I don't know, six months ago, eight months ago, eons in AI time, and they were going to invest a lot of money into OpenAI. And that deal, again, was press released before the contract was finalized and it ended up not happening. Or it radically shifted, it was a very different deal than the one that actually emerged six months afterwards. So Nvidia is a company that cares a lot about its image and likes to keep people excited. And so they put out this press release. I'm curious, I don't know why they did it now.