Nvidia is increasing its influence over AI infrastructure investment by combining vast cash holdings with outside capital. On Aug. 12 (local time), Business Insider reported that Nvidia is widening the gap with rivals by expanding financial support that underpins customers' GPU purchases and data-centre construction.

Shah Ravy (샤 라비), co-founder of Majestic Labs, pointed to Nvidia's financial strength as its biggest competitiveness, rather than technology or its sales network. Nvidia said at its earnings announcement in April it held more than $80 billion in cash and marketable securities, and generated an additional $50 billion in operating cash flow in the same quarter. Other big tech companies also have a lot of cash, but Nvidia differs in that it does not directly shoulder the cost of building large-scale data centres.

On Aug. 11 Nvidia unveiled a plan with Apollo, Blackstone and Goldman Sachs to bring in at least $500 billion in external capital to increase investment in Nvidia-based AI infrastructure. The idea is to expand infrastructure beyond what would be difficult with its own funds by using external financing.

Nvidia is also discussing guarantees for an OpenAI data-centre project worth hundreds of billions of dollars. It is providing financial backstops so AI-focused cloud providers known as neo-clouds can buy GPUs. It is also signing long-term agreements to secure scarce components. It is also investing in and supporting AI startups through NVentures and the Inception program.

The strategy leads to a structure in which technological superiority generates cash, and cash in turn strengthens market dominance. Bernstein's Stacy Rasgon said there was hardly a better way than using excess cash to expand its own product ecosystem.

Similar financial support itself is not a new approach. AMD also supported customers' chip purchases in the past, and Broadcom has recently pushed an AI infrastructure financing platform with Apollo and Blackstone. Still, Gil Luria of D.A. Davidson said Nvidia's financial strength is on a different level from its rivals.

The support is also translating into actual orders. Alex Yeh (알렉스 예), chief executive of GMI Cloud, said his company would not have secured Fireworks as a customer without Nvidia's support. The size of the contract between the two companies is in the nine digits. By contrast, Ravy said even if customers want Majestic Labs equipment worth several billion dollars, startups like his cannot offer financing support like Nvidia does.

Concerns about circular financing remain. If Nvidia's market share declines and the burden of fulfilling guarantees materialises, the hit could be large. Nvidia is spreading risk by bringing in Wall Street capital. Luria said Nvidia is sharing risk as well as rewards.