Nvidia’s role in financing artificial intelligence infrastructure is under scrutiny following the departure of chief executive Jensen Huang, although credit markets have shown no broad shock, CNBC reported.
Huang, who co-founded Nvidia 33 years ago, built the company into a dominant supplier of chips for AI. Chief financial officer Colette Kress has been named interim chief executive while the company searches for a permanent replacement, according to the report.
Beyond supplying graphics processing units to major technology companies, Nvidia has helped finance other businesses developing AI infrastructure.
Goldman Sachs analyst James Schneider said he expected Nvidia to honour its existing commitments, but that future deals involving multiple partners could be harder to arrange on the same scale.
Investors were already concerned about the debt being used to fund AI infrastructure. Technology bond yields have risen and the cost of credit default swaps — contracts that protect investors against a borrower’s failure to repay — has widened, particularly for lower-rated companies.
The yield on Nvidia’s 4.5 per cent bond due in 2031 stood at 5.77 per cent on Friday, nearly 6 percent higher for the week. Bond yields rise as prices fall.
Smaller AI companies could be most affected if Nvidia changes its financing strategy. Nvidia reported $36 billion in off-balance-sheet AI cloud agreements, or backstops, for specialist cloud providers known as neoclouds in its most recent quarterly filing in July.
CoreWeave, Nebius and IREN are among the companies in Nvidia’s portfolio. Their shares fell sharply on Thursday.
CoreWeave’s bond yields eased after its quarterly earnings on Tuesday, which helped calm investor concerns. The yield on its 9.75 per cent bond due in 2031 was 14.75 per cent on Friday, down from 16.7 per cent the previous week.
CreditSights analyst Andy Li said Nvidia’s future strategy remained unclear, but that Huang’s departure could lead to less aggressive deal-making and financial support for other companies.
“Jensen was so crucial in selling the Nvidia story and being a very aggressive deal maker,” Li said.
