Everybody loves Nvidia — but then, they can’t afford not to

{"text":[[{"start":5.04,"text":"Wall Street loves Nvidia. In case that wasn’t clear already, this week the bosses of six of the biggest names in global asset management pledged support for the chipmaker’s new project: a financing platform that would back $500bn of AI-empowering data centres."}],[{"start":21.24,"text":"It’s not their money that’s at stake, but that of their clients. Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR will mobilise money from pension funds, insurers, wealthy and wealthy-ish customers in to fund facilities stocked with Nvidia chips. Nvidia may guarantee up to a quarter of the value of some projects, chief executive Jensen Huang says."}],[{"start":45.76,"text":"There’s no mystery about why the Masters of the Universe are thrilled to be Huang’s wingmen. The proposal could boost assets under management for the investment firms, some of which are looking to deploy capital raised by their insurance divisions. Assuming alternative investment companies are valued — very roughly — at 10 per cent of their AUM, that’s $50bn of market value, plus fees from arranging loans and other capital raisings."}],[{"start":70.68,"text":"The firms also presumably have an eye on the broader financialisation of AI. One day computing power will be traded on futures markets just like oil, gold and soyabeans. Exchange group CME plans to launch a compute futures contract in October. BlackRock boss Larry Fink thinks Nvidia’s $500bn plan heralds the “future for financial engineering”."}],[{"start":null,"text":"

"}],[{"start":91.88,"text":"The enthusiastic chorus reflects another reality: Nvidia’s success is now everyone’s. At the end of 2024, Huang noted that “almost every company in the world seems to be involved in our supply chain”. Since his company is now $1.7tn bigger by market value, and its cost of goods sold has almost tripled, that must be even more true today."}],[{"start":113.08,"text":"A hiccup in that growth would be disastrous for companies growing in Nvidia’s wake. There is no sign of this at the moment. Huang said in May that the AI boom had “gone parabolic”. But were the mood to change, he might be less keen to offer funding and loan guarantees to customers like OpenAI. Sector valuations and the fate of upcoming blockbuster IPOs would come under pressure."}],[{"start":135.44,"text":"An AI rout would cause widespread harm because so much public market wealth is tied up in tech: software, communications and IT companies in the S&P 500 have added nearly $8tn of market capitalisation in the past year, Bloomberg data shows. That is fuelling everything from wealth management services to sales of luxury goods and high-end real estate."}],[{"start":157.4,"text":"There’s a mounting heap of credit at stake too. The Bank for International Settlements estimated that $200bn of loans had been made by the private credit industry to AI-related borrowers at the end of 2025, a number that could triple by 2030. Tech and hardware companies have issued $350bn of US-dollar bonds this year so far, Lex calculates from LSEG data — twice what they had issued by this time last year."}],[{"start":185.64,"text":"Again, there’s no sign a correction is imminent. But the question of who will use all these data centres, and for what price, remains unanswerable. Those with a moderately long memory remember Citigroup chief Chuck Prince’s pre-financial-crisis remark that “as long as the music is playing, you’ve got to get up and dance”. For now, the giants of the financial world have every reason to jig to Nvidia’s tune, and tip the band while they’re at it."}],[{"start":215.84,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1786604539_3239.mp3"}