Nvidia has paused some deals under a new financing initiative that offered credit support to AI cloud companies in exchange for a share of their revenue, the Wall Street Journal reported, citing people familiar with the matter.
The chipmaker stepped back from the programme last week, although it could still revamp the initiative or fold it into another programme. Nvidia said the business model remains in place and continues to evolve in response to strong demand.
The initiative, announced less than two months ago, was designed to help smaller AI cloud firms finance purchases of Nvidia chips. Under the proposed model, Nvidia could rent back computing capacity if cloud providers were unable to sell it, giving them a guaranteed buyer while allowing Nvidia to earn a share of revenue generated from its hardware.
Nvidia said during its earnings call this week that the model could generate billions of dollars in revenue over the medium to long term.
However, the programme has attracted increasing investor scrutiny over concerns about so-called circular deals that could artificially inflate demand for Nvidia’s chips. The company has also been expanding its financial support for AI infrastructure, including helping arrange US$500 billion in financing for customers and agreeing to guarantee up to US$105 billion to help OpenAI lease a large data centre.
The Journal reported that some Nvidia employees had raised concerns about potential antitrust scrutiny and the level of control the company could exercise over customers. Under proposed deals, Nvidia would receive 50% of cloud providers’ revenue from its chips above a certain threshold.
Reuters
