NVIDIA was on the verge of finalizing a landmark agreement to support OpenAI in building one of the largest planned data center projects globally, but the chipmaker's chief financial officer, Colette Kress, pressed the brakes. According to sources familiar with the matter, after media reports surfaced that NVIDIA was negotiating financial guarantees for a project expected to exceed $500 billion in costs, Kress pushed to shrink the deal size due to concerns over potential negative investor reactions. In the end, NVIDIA agreed to guarantee less than half of the originally discussed amount.

This was a tactical retreat, yet there is no sign of any pullback in the broader strategic effort to leverage the company's balance sheet in fueling the artificial intelligence boom. On Wednesday, the only company in the world with a market value surpassing $5 trillion released its second-quarter earnings, delivering a blockbuster announcement: its revenue growth rate would far exceed what Wall Street analysts had previously projected. NVIDIA shares climbed in after-hours trading, and by Thursday the company's market capitalization had swelled by $442 billion.

Riding the wave of optimism generated by the revenue outlook, NVIDIA executives publicly threw their weight behind the company's increasing use of financial guarantees, equity investments, and other tools to help clients purchase AI chips at scale. Kress highlighted several major recent moves: a data center project on federal land in Ohio; a $500 billion financing program set up with six major Wall Street investment banks for chip purchases; "selective credit enhancements" to help an unnamed AI lab secure 2 gigawatts of computing capacity; and credit support for emerging cloud providers that agree to share some revenue with NVIDIA. Kress also noted that NVIDIA has invested nearly $50 billion in frontier AI labs.

"We understand the scale of this support, and we know some will call it circular financing. But we see it differently," she said. Kress stated that OpenAI, Anthropic, and other so-called frontier AI labs "are growing faster than their balance sheets and credit profiles can support." These companies are generating unprecedented revenue growth, but sustaining that momentum requires continuous access to ever-expanding computing power, which they cannot easily achieve on their own without the ability to raise massive debt at competitive rates. Until they gain that capability, Kress said, "they need NVIDIA to help keep this growth flywheel spinning."

In contrast to the 5% drop in NVIDIA's stock when news of the Ohio guarantee first emerged, the market reacted positively to Kress's remarks on Wednesday, sending shares up 8.7% and marking the second-largest single-day market value gain in U.S. stock history. John Belton, a portfolio manager at Gabelli Funds, said these financing initiatives are aimed at accelerating AI data center construction and lowering borrowing costs for smaller cloud firms, but he also pointed out that such moves "remain controversial for the stock" given persistent concerns about circular financing. Nevertheless, he believes there is logical merit in helping customers shoulder data center construction costs. "This debate won't be settled anytime soon," Belton said. "But for now, these initiatives are poised to support both revenue and earnings growth in the short and medium term."

The ultimate expression of NVIDIA's flywheel strategy may well be the data center project in Portsmouth, Ohio. With a planned computing capacity of 10 gigawatts, the facility is set to become the largest of its kind in the world once completed. NVIDIA is providing financial support to several key participants in the project, with some entities receiving multi-layered funding guarantees. To help SoftBank's SB Energy, the project's developer, secure debt financing for the campus construction, NVIDIA agreed to guarantee a portion of the project's completion value, with a cap of $105 billion. In return, NVIDIA secured exclusive chip supply rights for the first half of the project's construction. The company also expects to arrange financing for the chips needed by OpenAI, with total chip purchases projected to reach $350 billion once the project is fully built out.