Nvidia defends AI investments as ecosystem building, not circular financing

Nvidia defended its investments in AI startups and customers during its Q2 earnings call, rejecting criticism that the practice constitutes circular financing. The company frames the support as building a thriving ecosystem where it expects to win. CFO Colette Kress said the investments are justified by strong demand and proven technology leadership among AI labs, calling them "once-in-a-generation companies." She acknowledged critics' concerns but emphasized limited risk and excellent expected returns, with supported customers projected to account for a quarter of next year's business. Nvidia's strategy involves financial backstops and equity stakes in firms that also buy its chips, raising questions about whether AI growth projections depend on its own support. The company sees this as broadening its client base beyond tech giants and positioning itself at the center of a major computing shift.