Nvidia (NASDAQ:NVDA) has held discussions with insurance companies about potential structures to transfer part of the financing risk associated with its chips as the company seeks to expand demand for artificial intelligence infrastructure beyond major technology groups, the Financial Times reported.
The discussions include potentially insuring loans made to smaller “neocloud” companies, according to the FT, which cited people familiar with the matter.
Under such an arrangement, insurance could provide protection to lenders if a borrower defaults and Nvidia chips pledged as collateral cannot be resold for enough to repay the outstanding debt.
The discussions remain at an early stage and may not result in agreements, according to the report.
Nvidia Explores Financing Structures for AI Chips
The discussions form part of Chief Executive Jensen Huang’s efforts to make Nvidia chips and AI infrastructure easier for external investors to finance, the FT reported.
Huang has argued that chips should be considered an “investable asset class” alongside other high-cost technology assets with extended useful lives.
According to the report, Nvidia has provided at least one insurer with information concerning chip depreciation and the expected future value of computing capacity.
People familiar with the discussions also told the FT that Nvidia had been working with insurance broker Howden Re on a potential structure involving insurers. Howden declined to comment, according to the report.
Potential Structures Could Include Alternative Investors
The financing structures under consideration could involve participants beyond traditional insurance companies.
Nvidia has explored arrangements under which insurance groups could syndicate risk to hedge funds and other alternative investors, according to the FT.
The potential size of some transactions could exceed the balance-sheet capacity of individual insurers, the report said.
Nvidia has also considered participating in financing consortia alongside insurers, hedge funds and asset managers.
No agreements have been announced and the supplied information does not provide details on potential pricing, counterparties or the amount of financing that could ultimately be covered by the proposed structures.
Nvidia Previously Offered Financing Support
The discussions follow previous efforts by Nvidia to support financing arrangements intended to facilitate investment in AI infrastructure.
According to the supplied material, Nvidia has offered to backstop part of financing deals intended to unlock $500 billion of capital from Wall Street firms including Goldman Sachs and Apollo.
Separately, Nvidia announced a $150 billion share repurchase programme on Monday.
Nvidia stock price
