Goldman Sachs taps investors for Nvidia’s $500 billion AI financing push

New York: Goldman Sachs is in talks with potential investors about participating in Nvidia's $500 billion AI financing initiative, after leveraging its long-standing relationship with the chipmaker to secure a coveted role in the deal, people familiar with the matter said.

U.S. insurers, money managers and banks are expected to form the core investor base for the financing, one of the people said, while asset managers plan to retain a sizable share of the financing, a second ‌source said.

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Nvidia announced ⁠on August ⁠10 it has partnered with six major financial institutions including Goldman to launch compute platforms aimed at raising over $500 billion in third-party capital for AI infrastructure. The move highlights how surging demand for AI computing capacity is drawing institutional investors, as governments, companies and startups race to build out data centers to support AI workloads.

Goldman can provide junior capital and private credit financing through its asset management arm, while its investment bank can also help place the debt into private credit funds and eventually public debt markets, the second source said.

The first source said the firm had held discussions with a wide range of investors about such structures, including banks, asset managers, insurers and private credit ​firms.

The Wall Street bank's central role as the sole lender on the deal, alongside alternative asset management ⁠giants such ‌as Blackstone and Apollo, marks the culmination of years of ties with Nvidia.

Goldman Sachs has advised Nvidia on several transactions and on ​numerous technology financing deals ​in which the chipmaker was an investor, according to Dealogic. The bank was also among the lead underwriters on the ⁠chipmaker's $25 billion bond sale in June and served as an exclusive financial adviser on Nvidia's $6.9 ​billion acquisition of Mellanox Technologies in 2019.

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The bank's technology teams also maintain close ties with Nvidia, while the ​relationship extends to the highest levels of both companies, the second source and a third source familiar with the matter said. Less than two years ago, Goldman Sachs CEO David Solomon interviewed Nvidia CEO Jensen Huang at a technology conference hosted by the Wall Street firm.

"Jensen came, approached us with the idea, and we said we'd love to talk to you about it," Solomon told CNBC in a joint interview with Huang and executives of other partner firms after the Nvidia financing plan was unveiled on Monday.

Nvidia declined comment and instead pointed Reuters to Huang's blog post which details that the financing is to support the ‌buildout of AI infrastructure over time.

Nvidia, which went public in 1999 in an initial public offering led by Morgan Stanley, is now worth about $5.2 trillion, making it the most valuable publicly listed company in the United States.

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Goldman Sachs Research analysts recently ​noted the financing needs ​for artificial intelligence are enormous with the ⁠top four hyperscalers planning to spend more than $5 trillion by 2030 on technology and data centers.

That scale of investment is likely to make private capital an increasingly important funding source.

The demand has encouraged firms to explore new ways of financing deals. The structure of the Nvidia financing differs from earlier AI infrastructure deals ​that depended heavily on vendor guarantees such as Broadcom's residual-value guarantee on roughly $30 billion of senior debt backing Anthropic's AI chip financing.

Nvidia CEO Huang said on X that the company has the option to backstop up to $125 billion, or 25% of the potential deals. The goal is to create an asset-backed market for AI compute, allowing debt to trade more like traditional securities, which could lower funding costs and draw a broader pool of investors, the second source said.

"This appears to be a pivot away from vendor-financing," said Bank of America analyst Vivek Arya in a note. "The burden sits with the consortium, not (Nvidia's) balance sheet."