As investors question the value of heavy artificial-intelligence spending, the specter of vendor financing once again hangs over the technology sector.
On Sunday, the Wall Street Journal reported that Nvidia is in talks to guarantee $250 billion in financing that would allow OpenAI to lease a data center being built in Ohio. The Ohio facility could cost over $500 billion and would be the largest data-center project announced to date, according to the Journal.
OpenAI declined to comment Monday; Nvidia did not respond to MarketWatch’s request for comment.
Even though it remains to be seen how a hypothetical deal would be structured, Seaport Research’s Jay Goldberg was cautious about this sort of arrangement.
“I don’t know all the details or even how real this is, but if it does happen, I think it’s hard to justify for Nvidia,” he said.
Goldberg noted that companies have previously “tripped themselves up with financing customer purchases.” He cited the telecom company Lucent, which engaged in vendor financing to boost sales in the 1990s. The decision “essentially broke that company,” he told MarketWatch.
“These kinds of financing usually don’t end well,” Goldberg added.
Shares of Nvidia lost 5% in Monday’s trading.
The Nvidia-OpenAI deal looks even more unusual when considering the electricity required to power the Ohio data center. The project is located on a decommissioned uranium-enrichment site on federal land in southern Ohio, and the campus would require 10 gigawatts of electricity.
In exchange for lower tariffs, Japan has agreed to invest over $33 billion in a natural-gas power project accompanying the facility that will be operated by data-center developer SB Energy, a subsidiary of SoftBank Group. OpenAI is also aninvestorin SB Energy.
The backing by Nvidia would enable SoftBank to raise debt on more favorable terms, the Journal noted, which would otherwise be challenging given how S&P Global has flagged OpenAI as a key credit risk.
The U.S. government will pay a fee to SB Energy to operate the plant, but the revenue will be divided between Japan and the U.S. until Japan has been repaid its $33 billion. From that point, the U.S. would keep 90% of the revenue, which would come from OpenAI, a future buyer of the energy.
The Trump administration has pitched the deal as a win for Americans and Ohio, despite growing pushback against the data-center buildout.
Commerce Secretary Howard Lutnick said in a March post on X that the project was “only made possible by President Trump’s trade and tariff policy!!” He added that it promises to “create thousands of jobs, lower electricity costs for American families, and deliver energy infrastructure needed to power the AI economy.”
The deal would be the latest in a string of vendor financing agreements in the AI ecosystem, whereby a seller lends to a buyer of its products.
“Investor feedback late last night was a combination of this being the clearest/largest circular-financing headline we’ve seen so far and we’re not entirely new to this circular-financing debacle,” Jefferies technology strategist Jeffrey Favuzza said in a note to clients.
Nvidia already has committed to investments in OpenAI, and also amended some of the earlier terms of such arrangements. In February, the Financial Times reported that Nvidia was pulling out from a $100 billion agreement originally announced in September, and replacing it with a $30 billion equity investment.
Broadcom and Advanced Micro Devices also have partnerships with OpenAI to deploy their chips. Additionally, OpenAI has committed $300 billion to Oracle to secure data-center capacity, much of which Oracle will use to buy Nvidia GPUs. Meanwhile, Nvidia holds$2 billionin cloud provider CoreWeave’s stock.
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