Nvidia (NVDA) announced on Monday that it had signed memoranda of understanding with six major financial institutions, including Apollo Global Management (APO) and BlackRock (BLK), to establish an independent computing power financing platform. The platform aims to mobilize over $500 billion in third-party capital over the long term for AI infrastructure construction. Bank of America analyst Vivek Arya clearly stated in a report that capital has always been the bottleneck rather than demand. A $500 billion funding pool can enable non-investment-grade buyers to obtain GPUs, computing power, and data center resources at attractive interest rates, effectively reducing procurement risks. Bank of America reiterated its “Buy” rating on Nvidia and its $350 price target.
By bringing in six major Wall Street financial institutions to establish an independent financing platform, Nvidia has shifted the capital pressure in AI infrastructure construction from its own balance sheet to third-party syndicates, while also opening up new low-cost financing channels such as asset securitization, effectively responding to market concerns about the “circular financing” model. Most Wall Street institutions are optimistic about this move, believing it consolidates Nvidia’s dominant position in the AI computing power infrastructure sector.
Morgan Stanley analyst Joseph Moore stated that despite market concerns about the “circular financing” issue, Nvidia’s actual direct credit exposure is mainly limited to credit guarantees for a few small cloud service providers, with the latest 10-Q filing disclosing total guarantee exposure of $3.5 billion. Investment partners will evaluate opportunities on a case-by-case basis, with Nvidia providing ecosystem support and possibly offering a “residual value protection mechanism” of up to 25% for certain investments. Morgan Stanley reiterated its “Overweight” rating and $288 price target.
RBC Capital Markets analyst Srini Pajjuri reminded that, considering the long procurement cycles for data centers and tight chip supply, any new projects are expected to take 2 to 4 years to complete, with limited revenue contribution over the next 18 months. He estimated that 40% to 50% of the $500 billion funding pool could be converted into revenue within 4 years. RBC reiterated its “Outperform” rating and $300 price target.
Wedbush Securities believes that although there is a trend toward diversification in AI chip applications, Nvidia remains almost the sole supplier of computing power infrastructure in non-hyperscale data center construction, and this funding is an important mechanism supporting its leadership. According to Tipranks data, the consensus rating among Wall Street analysts is “Strong Buy,” with an average price target of $309.94.
Gallo, Chief Investment Officer of Andromeda Capital, pointed out that the credit market is increasingly becoming a bet on U.S. computing power demand, with trillions of dollars pouring in frantically, and default risks may emerge—this is a “panic-driven capital expenditure.” For now, Nvidia’s own profitability remains strong, with free cash flow approaching $100 billion in the fiscal year ending January 25. Narro, Chief Investment Officer of Coherence Credit Strategies, stated that investors are coming to a new conclusion: because external institutions bear most of the risk, the likelihood of Nvidia being forced to absorb massive losses has decreased to some extent.
