• The cost of insuring Nvidia's debt surged to a record after reports of discussions over $750 billion in AI infrastructure financing tied to OpenAI.
  • Investors are growing concerned about Nvidia's expanding financial commitments, with analysts warning complex financing structures could increase credit risks.
  • The move underscores a broader trend where AI hyperscalers rely on extensive credit arrangements to fund capacity.

The cost of protecting Nvidia Corp.'s debt against default jumped to an all-time high on Wednesday, following reports that the chipmaker is in talks to backstop more than $750 billion in AI infrastructure financing linked to OpenAI. According to people familiar with the matter, the discussions involve Nvidia providing guarantees or other credit support for massive data-center projects that would use its chips.

Credit-default swaps on Nvidia's bonds surged, signaling heightened perceived risk. The move caught many market participants off guard, given Nvidia's strong cash position and dominant market share in AI accelerators. "This is a significant shift in how the market views Nvidia's credit profile," said a credit analyst at a major bank. "While they have ample liquidity, such large contingent liabilities can change the risk calculus."

The financing, if completed, would be one of the largest ever for AI infrastructure. It highlights the capital-intensive nature of the AI build-out, where companies like Nvidia are increasingly intertwined with the financing of their customers' projects. An Nvidia spokesperson declined to comment, and representatives for OpenAI did not respond to requests for comment.

Some analysts argue that Nvidia's robust cash flow and market capitalization provide ample cushion. "Nvidia is not at risk of default, but the market is pricing in the tail risk of these complex structures," said another analyst. The company reported $16.7 billion in cash and equivalents as of its last quarterly filing.

However, the move adds to a growing list of concerns around the sustainability of AI spending. Other hyperscalers have also turned to debt markets to fund expansions. The widening of Nvidia's CDS spreads could raise the cost of future borrowing for the company.

This article was updated to include market reactions.