Nvidia’s AI Buildout Runs Into a Hard Question: How Long Do the Chips Really Hold Value?
Published on 10/01/2026 at 21:43 | Editorial boerse-global.de
Nvidia is trying to finance the next wave of AI data center expansion with a capital structure that depends on the chips themselves. That is proving easier to sketch out than to underwrite. While the company has lined up financial partners including Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR to help mobilize more than US$500 billion over time, lenders are still wrestling with a basic issue: how much value a GPU really retains once it is pledged as collateral.
The scale of the ambition is enormous. Nvidia says a gigawatt-scale AI factory costs between US$50 billion and US$60 billion to build, and the plan is to support that kind of spending outside traditional corporate balance sheets. In theory, the graphics processors installed in those facilities can serve as loan security. In practice, banks are cautious.
A central point of friction is useful life. Nvidia treats its top-end processors as productive for as long as ten years. Banks, Reuters reported, generally model depreciation over just three to four years. That gap matters because the semiconductor industry moves fast, and older hardware can lose value quickly once newer generations arrive.
Nvidia has indicated it may back as much as 25 percent of residual value in selected projects. Even so, lenders are pressing for stronger guarantees or for proof of long-term contracts with highly rated cloud customers. If they do not accept the hardware as fully creditworthy collateral, project vehicles could face tighter loan terms, higher equity requirements or more expensive financing. More guarantees would also pull Nvidia itself closer to the risk of any eventual enforcement on the assets.
The financing push comes at a time when demand for AI infrastructure remains intense. In the second quarter of fiscal 2027, Nvidia’s data center division posted revenue of US$89.0 billion, up 117 percent. Partners such as CoreWeave are already putting the latest chip generations to work in live operations.
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At the same time, the company is giving shareholders another signal of confidence. On Monday, the board approved an additional US$150 billion for share repurchases, bringing the remaining buyback authorization to US$235 billion that is to be used through fiscal 2028.
Nvidia is also trying to shape the operating rules of the AI market it dominates. On 23 September, Jensen Huang used a podcast appearance to argue that AI companies should not be exempt from antitrust law or liability statutes, and that AI labs should be responsible for checking their products before release. The stance looks less like modesty than strategy: setting strict standards can raise the bar for competitors and make Nvidia’s own platform harder to displace.
That logic extends beyond chips. On Monday, the company introduced OpenShell and Sentry, two tools designed to secure AI agents. OpenShell isolates those systems, while Sentry is meant to stop agents that cross predefined boundaries. In a market where safety and liability are becoming part of the purchase decision, Nvidia is trying to package the guardrails alongside the hardware.
The company also cleared a legal distraction off its books. It settled a trademark dispute with Modulus Financial Engineering over the AI software name “Modulus” and, together with Modulus, informed a federal court in Texas and asked for the case to be stayed until the agreement is finalized.
Not every issue is under Nvidia’s control. On Tuesday, Netlist filed a complaint with the US International Trade Commission seeking an import ban on Micron memory chips and products containing them. That would also affect Nvidia systems, although the complaint is directed at Micron, not Nvidia. Separately, Reuters reported that China may allow domestic platforms ByteDance and Alibaba to buy Nvidia’s RTX PRO 5500 chips, while also noting that it could not immediately verify the report. The episode underlines how dependent Nvidia’s China business remains on political decisions.
In European trading, Nvidia shares were last seen at EUR203.50, close to the 52-week high of EUR205.35, leaving the stock just 0.9 percent below that level. In another reading of the market, the shares were quoted at EUR206.30, up 2.4 percent on the day. Either way, investors are still rewarding the company’s scale, cash generation and strategic control over the AI stack even as lenders probe the fine print behind the boom.
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