Wall Street biggie Goldman Sachs is reportedly in talks with potential investors about participating in Nvidia’s USD 500 billion AI financing initiative, after leveraging its long-standing relationship with the Jensen Huang-led chipmaker to secure a coveted role in the fund’s formation.
While American insurers, money managers, and banks are expected to form the core investor base for the financing, asset managers are also eyeing a sizable share of the pie.
Nvidia announced on August 10 about its partnership with six major financial institutions, including Goldman, to launch compute platforms that will raise over USD 500 billion in third-party capital for AI infrastructure.
Nvidia’s initiative comes amid the surging demand for AI computing capacity. While governments, companies, and startups are racing to build out data centers to support AI workloads, the trend is also drawing interests from the institutional investors.
“Goldman can provide junior capital and private credit financing through its asset management arm, while its investment bank can also help place the debt into private credit funds and eventually public debt markets,” claimed a Reuters report.
Goldman had held discussions with a wide range of investors about such structures, including banks, asset managers, insurers, and private credit firms. Talking about the Wall Street giant’s long-standing ties with Nvidia, it has advised the chipmaker on several transactions and on numerous technology financing deals.
The bank was also among the lead underwriters on the tech giant’s USD 25 billion bond sale in June, apart from serving as an exclusive financial adviser on Nvidia’s USD 6.9 billion acquisition of Mellanox Technologies in 2019.
“The bank’s technology teams also maintain close ties with Nvidia, while the relationship extends to the highest levels of both companies,” the Reuters report claimed further.
“Jensen came, approached us with the idea, and we said we’d love to talk to you about it,” CEO David Solomon told CNBC in a joint interview with Huang and executives of other partner firms after the unveiling of Nvidia’s financing plan.
Nvidia, which went public in 1999 in an IPO led by Morgan Stanley, is now worth about USD 5.2 trillion, making the chipmaker the most valuable publicly listed company in the United States, with Apple being the closest competitor for the coveted position.
As per the Goldman Sachs Research analysts, the AI-related financing needs will become enormous in the coming years, with the top four hyperscalers planning to spend more than USD 5 trillion by 2030 on technology and data centers.
That scale of investment is likely to make private capital an increasingly important funding source.
Nvidia’s financing is set up differently from past AI infrastructure deals that relied a lot on vendor guarantees, like Broadcom’s guarantee on about USD 30 billion of senior debt for Anthropic’s AI chip financing.
As per Huang, the company has the option to backstop up to USD 125 billion, or 25% of the potential deals.