WSJ: Nvidia made a very smart move by partnering with 6 large Wall Street investors to create a financing platforms that lend against its chips.

But why

Nvidia's revenue depends on customers being able to pay for chips most cannot buy with cash. The large tech firms can; the smaller AI labs, clouds and enterprises behind the rest of the demand have to borrow, and their costs have risen as investment-grade issuers absorb the available credit.

CoreWeave paid yields above 9% this month, showing what AI borrowers now pay for compute.

If they cannot finance purchases, orders slow even though demand exists.

The earlier fix was Nvidia's own balance sheet, through investments in customers and guarantees on their debt, which drew criticism as circular funding.

So routing capital through outside asset managers replaces Nvidia's money with pension, insurance and sovereign-fund money, and moves credit decisions elsewhere.

Jensen Huang says Nvidia may backstop 25% of a project's cost through residual-value support.

That 25% residual-value support is what gets that money moving.
Investors are lending against hardware whose resale value depends on how fast Nvidia's next generation arrives, the one variable they cannot price and Nvidia controls. Guaranteeing a floor covers exactly that risk, which is why skeptics still see circularity in a thinner form.