NVDIA finances leading AI companies like OpenAI AI data centers via leases and guarantees.
NVIDIA currently runs the risk of being exposed to 230 billion USDs in lease obligations and residual value deals.
While, this sum does not look too big compared to NVIDIA's revenue and earnings, if NVIDIA keeps giving out hundreds of billions of USDs to finance the AI boom leaders like OpenAI, Anthropic etc. it runs the risk of becoming cash flow negative.
While the risk of NVIDIA becoming cash flow negative is distant for now given NVIDIA's YoY more than 100 % percent revenue and profit in the last reported quarter, if NVIDIA starts making losses, instead of producing positive cash flow, the very solvency of the NVIDIA, the company leading the AI boom could be exposed in the mid to long-term.
NVIDIA's market capitalization is more than 5.5 trillion USD and if NVIDIA gets into financial trouble this could derail the AI boom and destroy tens of trillions of USDs of value mainly in the hyperscalers like Amazon, Alphabet, Meta and Microsoft which are leading the AI boom.
And since leading global banks like JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley, Barclays, Deutsche Bank, UBS, HSBC, Santander, BNP Paribas, Societe Generale etc. have financed AI technology companies with hundreds of billions of USDs, an existential crisis in NVIDIA, Amazon, Alphabet, Meta and Microsoft and other leading AI companies like Oracle, SpaceX, OpenAI, Anthropic runs the non negligible risk of causing a global financial crisis akin to the Great Recession in 2009.