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Calendar year for all, analyst estimates for 2026 and 2027 (LSEG)<\/p>\nNew technology is discovering an old-fashioned bottleneck: credit. Fat cash flows from Microsoft, Alphabet, Amazon.com\u00a0and Meta Platforms paid for the first few years of the artificial intelligence frenzy.\u00a0<\/p>\n
Rapid growth makes the next step harder. Unprofitable model developers, including OpenAI and Anthropic, are seeking help from deep-pocketed supporters, which adds complexity and concerns.<\/p>\n
Nvidia is in talks to guarantee up to $US250 billion of financing for a 10-gigawatt data-centre project involving SoftBank’s SB Energy, the Wall Street Journal reported\u00a0on Sunday. OpenAI may become the tenant. The chipmaker would backstop the lease and construction debt, while separately considering financing as much as $US350 billion more for GPUs on the site.<\/p>\n
OpenAI, the ChatGPT developer, lacks an investment-grade credit rating. Nvidia’s balance sheet could therefore reduce the perceived risk for lenders and lower the cost of capital for SoftBank and OpenAI. It is not writing the check itself, but deploying funding strength from the AI boom to roll out more computing power.<\/p>\n
The buildout is straining all participants. Free cash flow at Meta and Microsoft is on track to deteriorate sharply through 2027, according to estimates compiled by LSEG, with Oracle and Alphabet already having turned negative in the most recent quarter reported. Morgan Stanley analysts estimate investment from hyper scalers will reach some $US875 billion this year. Credit investors are becoming warier, with buyers of debt for Meta-backed data centres demanding higher yields, the Financial Times reported.<\/p>\n
Calendar year for all, analyst estimates for 2026 and 2027 (LSEG)<\/p>\n
Returns also remain uncertain. Cloud-related revenue is booming, but there’s limited evidence AI spending will produce commensurate profit beyond\u00a0the server providers.<\/p>\n
Nvidia argues that each new chip generation improves the economics by producing more tokens per watt and a lower cost per token. If more efficient chips and Chinese open-source models mean competitive performance requires less power and capital, however, today’s heroic investments may look excessive before they’re finished.<\/p>\n
In fiscal 2026, Nvidia generated around $US100 billion of operating cash flow on nearly $US220 billion of revenue, so it can probably afford to help its customers. Its latest annual report, however, warns that future financing arrangements may reduce upfront cash flow and increase credit risk.<\/p>\n
There’s reason for caution. Nvidia’s share price tumbled -4% on Monday after news about the potential financial backstop, in contrast to a +4% jump about a year ago, when Nvidia boss Jensen Huang unveiled an OpenAI partnership. He has created a significant edge by selling picks and shovels to the AI gold rush. Standing behind those eager to mine wider and deeper is a far riskier proposition.<\/p>\n
– Reuters<\/p>\n","protected":false},"excerpt":{"rendered":"New technology is discovering an old-fashioned bottleneck: credit. Fat cash flows from Microsoft, Alphabet, Amazon.com\u00a0and Meta Platforms paid…\n","protected":false},"author":2,"featured_media":827960,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[2001,64,63,166,2009,99,2003,2005,160,2010,171,2007,2006,2008,2002,2004,1491],"class_list":["post-827959","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-asx","tag-au","tag-australia","tag-australian-dollar","tag-bitcoin","tag-business","tag-dollar","tag-dow-jones","tag-live-blog","tag-live-update","tag-markets","tag-nasdaq","tag-nyse","tag-sp","tag-share-market","tag-stocks","tag-wall-street"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/827959","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=827959"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/827959\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/827960"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=827959"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=827959"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=827959"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}