Editor’s Note: This story has been updated to include a response from Nvidia.
Nvidia Corp. (NASDAQ:NVDA) has reportedly temporarily paused its financing program that offered credit support to AI cloud providers in exchange for a share of their revenue, backing away from the initiative less than two months after unveiling it.
Employees Raise Antitrust Concerns
Some of the company’s employees told current and potential customers they were worried the program could draw antitrust scrutiny, citing sensitivities around how much control the chip giant could exert over its customers’ businesses, The Wall Street Journal reported Thursday.
Nvidia stepped back from the program last week and could revamp it in the future or fold it into a different initiative, the report added, citing people familiar with the matter.
“The new business model we introduced in July that opens up compute access to the fast-growing AI ecosystem is still in place and continues to evolve due to high demand,” an Nvidia spokesperson told Benzinga.
The Program Launched In July
The initiative was introduced in July, offering AI cloud providers credit support through minimum revenue guarantees in exchange for a share of future revenue above a specified threshold, allowing the company to profit from both hardware sales and a cut of customer earnings.
“In this model, we get paid twice, once on the hardware sale and again through the share of rental revenue,” CFO Colette Kress said on Wednesday’s second-quarter earnings call.
She pushed back against claims that the arrangement amounts to “circular financing,” saying the company’s risk remains low because its computing hardware can always be redeployed to other customers.
Part of a Broader Financing Push
The revenue-sharing model is one of several tools Nvidia has used to support its customer ecosystem, including a nearly $50 billion investment in frontier AI labs and a partnership with Apollo Global Management (NYSE: APO), BlackRock Inc. (NYSE: BLK), Blackstone Inc. (NYSE: BX), Brookfield Asset Management (NYSE: BAM), Goldman Sachs (NYSE: GS) and KKR & Co. Inc. (NYSE: KKR) to mobilize more than $500 billion in third-party infrastructure capital.
Earlier this month, “The Big Short” investor Michael Burry called Nvidia’s AI financing push a “Wall Street stunt.”
The pause comes even as Nvidia posted record second-quarter revenue of $96.22 billion, above the $92.11 billion analysts expected, according to Benzinga Pro, and guided for $108 billion in the third quarter, a figure that would mark roughly 1,730% revenue growth over four years if achieved.
Price Action: Shares of the company rose 8.74% in Thursday’s regular trading session to $227.98, but fell 0.83% in Friday’s pre-market trade to $226.09.
Benzinga Edge rankings indicate Nvidia’s stock has a Momentum score in the 79th percentile and a Growth score in the 98th percentile.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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