Lenders are pushing back on the terms of Nvidia's plan to use its AI chips as collateral for data center loans, asking for far stronger guarantees than the company first proposed, Reuters reported Thursday in a story carried by Investing.com. Bankers said tens of billions of dollars of deals in the pipeline are likely to carry heavier protections as a result.

What Happened

In August, Nvidia announced a $500 billion financing initiative with partners including Blackstone, Apollo and KKR. The idea is to treat GPUs as financeable infrastructure, much as aircraft are leased and financed, so that data center developers can borrow against the chips and their customer contracts to get Nvidia computing capacity. CEO Jensen Huang has presented the program as a way to bring independent institutional money into AI infrastructure and answer concerns about circular financing.

Nvidia originally proposed residual-value guarantees as low as 25%. Three bankers outside the original financing group told Reuters that the market is not ready to treat chips like aircraft and that lenders want stronger guarantees on every deal. Some are asking for full guarantees from Nvidia, or for the debt to be supported by revenue from investment-grade customers.

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Nvidia said in a statement that AI compute is a productive, durable and fungible asset that can support long-term financing, and that its partners independently assess customer commitments, cash flow and residual value. Five of the six financial partners declined to comment, and Apollo did not respond, according to the report.

Why It Matters

The dispute centers on how long a GPU stays valuable. Huang has said GPUs can have useful lives of up to a decade, and Nvidia has cited a study suggesting its GB300 NVL72 systems could run for nine to 10 years. Banks usually underwrite GPUs over three to four years, said Tony Trzcinka of Impax Asset Management, and investors are likely to demand higher interest rates and bigger cushions to bridge that gap.

If lenders assume a short life, a chip-backed loan has to be repaid quickly or supported by something other than the hardware. That makes the financing more expensive and shifts risk back to Nvidia or to the end customer, which undercuts the goal of drawing in outside capital on the strength of the chips themselves.

S&P Global Ratings director Andrew Chang said the agency takes a conservative view of the value of the chips. Loren Moran of Wellington Management said investors will be pickier about the compensation they require, and Brian Gelfand of TCW said precedent deals suggest creditors do not accept long average lives for these assets.

Deals That Got Done

Recent transactions show what lenders will accept. CoreWeave, in which Nvidia holds a stake, closed an $8.5 billion GPU-backed loan facility that received an A3 rating, the first investment-grade rating for such a deal, Reuters reported. The rating relied heavily on Meta's contracted payments. In another case, Broadcom backstopped more than 80% of a roughly $35 billion financing structure supporting Anthropic's computing capacity to attract debt investors.

Morningstar analysts have warned that the mix of private credit, vendor financing and circular deals echoes the dot-com era, according to the report.

What to Watch

The first loans under Nvidia's program will show the guarantee levels and interest rates lenders actually accept, and whether Nvidia raises its residual-value commitments above 25%. Bankers said there is not yet enough historical data to underwrite long GPU lifespans with confidence, so resale prices for older chips such as the Hopper generation will be closely watched. Rating agency treatment of any new deals that lack a CoreWeave-style anchor customer will also indicate whether chips alone can carry debt.