Nvidia Defends AI Investments Against Circular Financing Claims

Nvidia is defending its multi-billion-dollar investments in AI companies against accusations of circular dealmaking, where its financing flows back to itself through chip purchases. The chipmaker argues these bets will yield strong returns, despite critics warning of concentrated financial risks. Nvidia CFO Colette Kress addressed concerns on Wednesday's earnings call, citing a $105 billion guarantee for an OpenAI data center as an example of what critics call circular financing. She argued the investments are sound, though many deals remain non-binding memoranda of understanding, and a prior $100 billion OpenAI agreement failed to materialize. Nvidia reported $96.2 billion in second-quarter revenue, projecting a 70% increase next fiscal year. However, five customers account for 70% of its receivables, and Google posted its first negative free cash flow since 2004 due to AI spending, highlighting dependency risks.