Nvidia is turning GPUs into capital, but questions exist around sustainability — AI companies are financing hardware like debt, as bank warns of 'sharp market correction'

Nvidia is transforming GPUs into financial assets, with AI companies like xAI financing hardware through debt, leaseback schemes, and vendor equity. This trend is driven by supply shortages and capital excess in the generative AI market. Nvidia has struck significant deals with xAI and OpenAI, pre-funding GPU roadmaps and blurring the lines between supplier, investor, and customer. In contrast, AMD's cautious approach with OpenAI focuses on performance incentives rather than immediate financing, potentially offering a more sustainable strategy in the volatile AI hardware market. Concerns exist about a potential market correction in AI-linked equities due to inflated valuations and the circular nature of GPU financing.