Nvidia's complex transactions with AI customers like OpenAI and Core Weave have sparked discussions about "circular financing." However, the company frames these as traditional vendor financing, where it enables customers to purchase more products than they could otherwise afford.

Nvidia employs various methods, including equity investments, which reached $42 billion by April, up from $3 billion a year prior. These are not strictly circular but rather back-to-back arrangements. Additionally, Nvidia offers credit guarantees, potentially supporting OpenAI with up to $250 billion. CEO Jensen Huang is also venturing into leasing data center services, effectively acting as a customer's customer.

While these financing strategies offer Nvidia a dual benefit—profits from chip sales and returns on equity investments—they also amplify risk. If customers falter, Nvidia faces not only lost sales but also financial exposure. Though Nvidia has substantial liquid assets, its risk profile is evolving as these financial commitments escalate.