Nvidia's shares dropped nearly 5% after news emerged about its plans to offer around $250 billion in financing guarantees for OpenAI’s gigantic new data center in Ohio. The scale of the deal hints at potentially risky financial arrangements reminiscent of past tech bubbles.
Massive Financing Raises Red Flags
The proposal includes backing a data center with 10 gigawatts capacity, a figure so immense it could power a mid-sized European country. Alongside this, Nvidia is reportedly negotiating chip sales worth up to $350 billion, possibly pushing the entire engagement beyond half a trillion dollars. Concerns stem from the nature of the financing, which analysts warn resembles "circular financing" seen during the dot-com era, where companies extended credit to customers who then used that money to purchase more products from the same suppliers. That cycle inflated revenue figures unrealistically and contributed to market crashes, like Lucent Technologies' dramatic collapse.
Ongoing Negotiations and Shifting Commitments
A letter of intent from September 2025 initially outlined Nvidia's commitment to invest up to $100 billion, starting with a $10 billion tranche to support OpenAI’s deployment of Nvidia technology. Internal doubts led to the figure being scaled down to discussions of $30 billion by early 2026. Now, with talks moving toward $250 billion in financing guarantees, the magnitude of the project continues to evolve. Given the involvement of US government elements related to energy consumption, the deal's complexity is growing.
This material is for informational purposes and does not constitute financial advice.
