Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom (io-fund.com)

Nvidia, CoreWeave, and Nebius are driving the GPU boom through a unique model of circular financing that reflects the increasing demand for AI infrastructure. As hyperscalers like Microsoft and Meta commit substantial funds—over $122 billion in total—to neoclouds for rapid access to the latest Nvidia GPUs, these partnerships are crucial for meeting the soaring compute needs. CoreWeave and Nebius have established significant power capacities—3.5 GWs each—yet face challenges converting this potential into revenue amidst high debt loads. Their strategy includes leveraging Nvidia’s investments, which enhance their access to cutting-edge technology while optimizing GPU utilization through specialized software like CoreWeave’s Kubernetes Service and Tensorizer. The significance of this model lies in its impact on the broader financial landscape for hyperscalers, allowing them to convert capital expenditures (capex) into operating expenses (opex), thereby alleviating pressure on their balance sheets. This financing arrangement not only supports the rapid deployment of neural networks and AI models but also complicates long-term viability for CoreWeave and Nebius as they navigate a tight macroeconomic environment. Nvidia’s commitment to backstop unsold capacity adds another layer to this complex financial ecosystem, raising questions about sustainability as both neoclouds continue to operationalize their contracts against a backdrop of increasing GPU demand.