Wall Street is about to sell AI bonds. What could go wrong?

August 13, 2026 — 12:16pm

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What do you do when your financial capacity to help your customers buy your products becomes stretched? You turn to Wall Street, of course.

That’s what Nvidia has done, enlisting some of the biggest names in private capital – Goldman Sachs, Apollo Global, KKR, Brookfield and Black Rock – to arrange a pool of $US500 billion ($708 billion) or more of capital to help fund purchases of Nvidia chips.

The firms haven’t actually committed that much capital – they’ve signed memorandums of understanding, not lines of credit – and every project brought before them will be individually evaluated.

Nevertheless, Wall Street has provided a signal of intent.

With Nvidia’s own ability to continue to effectively provide vendor financing for purchases of its chips – the “circular financing” arrangements that have been increasingly scrutinised and criticised – perhaps constrained, it wants to enlarge the circle – and it’s Wall Street’s access to vast pools of private capital that will enable that.

Not that Nvidia won’t contribute. It says it will guarantee 25 per cent of the residual value of the collateral for any project.

For the Wall Street firms, the allure is that it could create a new class of asset-backed securities that they can on-sell to pension funds, insurers, sovereign wealth funds and wealthy investors, clipping the tickets on the way through.

It refers to those projects – the chips and data centres and other infrastructure that support the training of AI models – as “AI factories,” but two-thirds or more of the value of those factories will lie in the value of its own chips. That’s potentially a $US125 billion exposure for Nvidia, its shareholders and its creditors.

For Nvidia, the concept is designed to increase the capacity of its non-hyperscaler customers to fund the purchases of its chips.

Sharemarkets and conventional lenders have become warier, and more discerning, about the AI companies they are prepared to back........

© The Age