The money loop behind NVIDIA's next $700 billion

In August NVIDIA gave a full-year forecast for the first time in its history. Revenue in the year to January 2028 should rise about 70%, to roughly $700 billion. Within days the analysts' consensus moved to the same number, and at $214 the shares trade at 13.5 times the earnings that forecast implies.

On the same call the chief financial officer gave a second number, which received less attention.

"We expect demand from the AI labs for which we expect to leverage our balance sheet to contribute toward roughly a quarter of our business next year."

NVIDIA buys stakes in these customers, guarantees their leases and agrees to rent back their capacity. The customers sign compute contracts with the cloud providers, the cloud providers borrow and buy NVIDIA systems, and the money returns to NVIDIA as revenue.

The weakest link is the contracts. OpenAI and Anthropic have promised the big buyers about $1.1tn for computing power, most of it over the next five years. In 2026 the two labs took in about $320bn: $91bn of revenue and $232bn of new money, nearly half of which came from NVIDIA and the cloud providers themselves. Nobody has the other $780bn yet. It has to come from sales the labs have not made and money they have not raised. OpenAI's own plan has its revenue rising from $13bn in 2025 to $350bn in 2030.

The big buyers are building and borrowing now against those promises, and buying NVIDIA systems with the money.

The loop runs on borrowed money

Most of the money that entered the loop in the past year was borrowed. The big buyers added $263bn of bonds and loans and took on $36bn of data centers through leases. Banks lent about $66bn against data centers leased for OpenAI. SoftBank borrowed $51bn to pay for its OpenAI shares. Anthropic's chips are financed through $95bn of debt vehicles. CoreWeave borrowed $37bn and SpaceX sold $25bn of bonds. Together that is about $570bn, more than six times what OpenAI and Anthropic earned in 2026.

NVIDIA is arranging more. In August it signed memoranda with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR for financing platforms meant to raise more than $500bn "over time" for AI infrastructure. The lenders underwrite each project; NVIDIA may, at its option, guarantee part of the hardware's residual value, and has filed a standard contract for doing so. It also owns $3.3bn of stakes in such infrastructure financiers.

Much of the newer debt is secured on the labs' promises: CoreWeave's loans on its customer contracts, the site loans on OpenAI's leases, Anthropic's junior debt on its lease payments. Lenders already charge for the risk: 14-16% on CoreWeave's bonds, more than 10% on Anthropic's junior debt, and 89-91 cents on the dollar for the loan behind OpenAI's New Mexico site.

Two thirds of last quarter's sales are still unpaid

At the end of July NVIDIA's customers owed it $63.1bn, two thirds of the quarter's $96.2bn of sales. Three months earlier they owed half a quarter's sales. The jump of $22.3bn came after NVIDIA gave large buyers payment terms of up to a year.

The unpaid bills are where profit and cash part ways. NVIDIA reported $59.7bn of profit for the quarter, and $24.1bn of it arrived as cash: 40 cents on the dollar, against about 95 cents over 2023-2025. Another $7.8bn of the profit was the rising value of NVIDIA's stakes in other companies, mostly booked without any sale. Part of those gains come from funding rounds NVIDIA took part in itself: when a customer raises money at a higher valuation, NVIDIA marks its existing stake up to the new price.

NVIDIA now stands behind its customers

Two years ago NVIDIA's financial ties to its customers were small: $1.8bn of stakes and $8.8bn of cloud capacity it had agreed to rent back. By August 2026 the stakes were valued at $99bn, the rent-back commitments had reached $65bn, and NVIDIA had guaranteed up to $108.5bn of its customers' data-center leases. Together that is $273bn, about 90% of its revenue over the last four quarters.

The guarantees take effect later. The largest, up to $105bn, covers OpenAI's leases on a 4.25-gigawatt campus in Ohio from NVIDIA's 2029 fiscal year. NVIDIA has also set up financing vehicles with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR, which aim to raise more than $500bn for the labs.

The buyers are borrowing to buy

Since early 2024 NVIDIA's revenue has moved in step with the capital spending of the five biggest spenders on data centers: Microsoft, Alphabet, Amazon, Meta and Oracle. For every dollar they spend, NVIDIA books about 53 cents. NVIDIA expects these five to spend $1.3tn in 2027; at 53 cents that is $689bn, almost exactly its own forecast. The Wall Street consensus for their spending is nearer $1.1tn, which at the same ratio gives NVIDIA about $583bn.

Together, the five no longer pay for this out of spare cash. Over the last four quarters their capex rose by $254bn and their operating cash flow by $178bn. They cut buybacks and dividends from $154bn to $88bn, added $263bn of debt and took on another $36bn of data centers through finance leases. Counting the leases, Microsoft, Amazon and Oracle spent more than their cash flow after dividends and buybacks over the year, and Alphabet did in the second quarter of 2026. Only Meta still had cash to spare, and barely so in the latest quarter.

Part of the cash flow they do have comes back from the AI labs, and part of the labs' money came from them. Microsoft invested in OpenAI, which paid Microsoft about $10.6bn in 2025. Amazon put $50bn into OpenAI and got $138bn of AWS contracts; Google put money into Anthropic and got at least $111bn of contracts. NVIDIA's own $30bn in OpenAI reaches the same cloud providers the same way, and returns to NVIDIA when they buy its systems.

The backlog rests on two labs that cannot yet pay for it

The borrowing and guarantees traced so far rest in the end on contracts with two companies. OpenAI and Anthropic account for about 40% of the $2.35tn of contracted business at the four big cloud providers: about $690bn for OpenAI and $250bn for Anthropic, on midpoints of estimates. Oracle is the most exposed, with about half of its $664bn backlog from OpenAI. OpenAI is about a third of Microsoft's backlog, and the two labs together are almost half of Amazon's.

OpenAI is far from paying for its share out of sales. It booked $12.4bn of revenue in the first half of 2026, against $36bn planned for the year, and its own plan burns $278bn of cash over 2026-2030; the money runs out during 2028. It pays with money it raises, and most of that comes from its own suppliers or is borrowed. Of the $122bn it raised in 2026, $50bn came from Amazon, $30bn from NVIDIA and $30bn from SoftBank, which borrowed it. Banks have lent another $66bn against the data centers leased for it.

Anthropic is closer to paying its way, but its growth is fading. Its sales rose from $4.7bn in the first quarter of 2026 to $11.5bn in the second and $16.8bn in the third: 145% growth, then 46%, and the third quarter added $5.3bn against $6.8bn the quarter before. These are figures it gave prospective investors ahead of its listing, not audited accounts, and it told them it had turned cash-flow positive. Against them stand commitments of at least $613bn over about ten years, about 80% of them non-cancellable: $61bn a year on average. A year at the third quarter's pace, about $67bn, pays for about $40bn of that at $1.70 of revenue per dollar of compute. Revenue alone closes the gap only if growth stays above about 13% a quarter through 2027; one more slowdown like the last would take it to about 15%. Until then Anthropic pays with raised and borrowed money: its suppliers have put in or promised more than $80bn, financial investors added about $80bn in 2026, and its chips are financed with $95bn of debt secured on its lease payments.

So the backlog is only as good as the labs' next round of money. OpenAI is seeking about $30bn more, and Anthropic's listing in mid-November will show what investors pay for slowing growth. Some contracts are already slipping: OpenAI has scaled back projects in Abilene, the UK and Norway, and Oracle has invoked force majeure on its New Mexico site, where the loans trade at 89-91 cents.

Both labs reach NVIDIA. OpenAI is its largest end-customer, with about 12 GW of its systems committed through 2030. Anthropic trains mostly on Google and Amazon chips but rents NVIDIA capacity as well: from SpaceX at $1.25bn a month on 90 days' notice, from Nscale and Fluidstack for $95bn, and $31bn of it on Azure. NVIDIA also owns stakes in both, $30bn in OpenAI and up to $10bn in Anthropic; it counts their rising value as profit and would count a fall as a loss. By NVIDIA's own estimate, the labs it finances will bring about a quarter of its business next year.

What the share price assumes

At $214 NVIDIA trades at 13.5 times next year's consensus earnings, a low multiple for a company growing 70%. The risk sits in the earnings. The scenarios below apply the 53-cent ratio to different levels of capex, remove part of the demand that depends on the labs NVIDIA finances, about 15% of revenue linked to OpenAI and 10% to Anthropic, xAI and the others, and value the result at a multiple the market might pay.

Stocks fall when growth slows

Cisco's revenue grew 18% in its 2001 fiscal year while its share price fell by more than two thirds. Cisco had also financed customers that bought its equipment. The stock turned when growth peaked, more than a year before revenue fell.

NVIDIA's growth sped up again in the latest quarter, to 106%. Its own guidance has it slowing to about 70% next year. If the big buyers raise capex by the 12% Goldman Sachs expects for 2028, NVIDIA's growth the year after would fall to about 12%, and lower if demand linked to the labs shrinks. The difference from 2000 is the valuation: Cisco traded at more than 100 times earnings, NVIDIA at 13.5 times next year's consensus.

It has happened to NVIDIA before

NVIDIA has lost more than half its value twice in eight years: 56% in late 2018, when demand from cryptocurrency miners disappeared, and 66% in 2022. With a beta of 2.2, a 10% fall in the market has typically meant a 22% fall in the stock.

What would change our mind

None of this says NVIDIA will miss next year. NVIDIA says most of fiscal 2028 is already ordered and that supply limits it more than demand. The risk is that a growing share of demand rests on money NVIDIA and its suppliers put into their own customers, and the test comes in 2027, when the buyers decide how much to build for 2028. These would weaken the case:

• NVIDIA's results on 17 November show days of sales back under 50 and cash conversion above 80%.
• The five big buyers guide 2027 capex to $1.3tn or more without adding debt at the 2026 pace.
• OpenAI closes its next round, about $30bn at a valuation of $1.2-1.4tn, and reaches its $36bn revenue plan for 2026.
• Anthropic's listing, planned for mid-November, raises $100bn or more.
• Credit at the weak links recovers: CoreWeave's five-year CDS below 700 basis points, the Oracle-linked Jupiter loans back near par.

By Gabor Gulyas