Technology investor Gene Munster has defended Nvidia’s customer financing arrangements, arguing that the chipmaker stands to make enough money to justify helping fund the buyers.
In a ZeroHedge debate with investor George Noble, moderated by Jack Farley, Munster rejected comparisons to the circular deals of the dotcom boom. He reckons Nvidia’s potential profits make the arrangements perfectly sensible.
“They will put in 250 billion. They will take out 420 billion. What is a Ponzi scheme about that? That is just smart business,” Munster said.
Munster’s rough calculation assumes a $1 trillion financing pool, with Nvidia contributing about $250 billion and collecting 60 per cent of the resulting revenue. Apply a 70 per cent gross margin to that $600 billion, and the answer is $420 billion.
That is a projection of gross profit under his assumptions. It does not establish how much cash Nvidia will ultimately recover after financing costs and any losses on its commitments. The arithmetic works beautifully provided the customers and margins do what they are told.
Munster named BlackRock and Apollo among the financiers which could invest alongside Nvidia. He argued that the chipmaker’s contribution could help draw in outside capital and generate substantial demand for its hardware.
His comparison with the 1990s focused on internet companies raising money and spending it on advertising with one another, keeping their partners’ revenues afloat.
“They did it until that capital ran out and then there was no buyer for the ads,” Munster said.
Noble was unconvinced. He argued that genuinely compelling returns should attract independent financing without Nvidia having to support the customers buying its products. His concern was that today’s chip sales and profits could flatter the economics of a construction boom whose costs would become clearer later.
The financing figures need some care too. Nvidia’s fiscal second-quarter filing lists $108.5 billion in maximum gross guarantee exposure, which should not be confused with money already lent or invested.
Of that total, $105 billion relates to credit support for SB Energy’s PORTS Technology Campus in Pike County, Ohio. The project covers about 4.25GW of IT load under 20-year leases to OpenAI and will host Nvidia infrastructure, subject to limited exceptions.
The guarantees take effect in phases as conditions are met, with the first data centre expected to enter service in Nvidia’s fiscal 2029. Exposure should decline as OpenAI pays its leases, while Nvidia’s payment obligations are triggered by specified tenant defaults.
