Nvidia Corp (NASDAQ:NVDA) is paying $1.5 billion to rent its own chips – yes, the same GPUs it sold to Lambda, a cloud startup it partly owns. If this feels like déjà vu, that's because it is: Nvidia ran the same play with CoreWeave Inc (NASDAQ:CRWV) before its IPO, and now Lambda's prepping to go public too.
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This strategy isn't just creative finance – it's a carefully orchestrated ecosystem where Nvidia cashes in twice, first on chip sales, then on startup equity, while fueling its own AI research.
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Seeding the Cloud, One Startup At A Time
By backing startups like Lambda and CoreWeave, Nvidia is hedging against hyperscalers like Amazon Web Services and Google Cloud, who buy its GPUs while developing their own.
These investments diversify Nvidia's customer base, create future demand pipelines, and give it leverage in a fiercely competitive market. Nvidia's startups essentially double as customers and partners, helping it maintain dominance as AI chip demand soars.
The Transparency Question
Yet the brilliance comes with a catch.
Nvidia's chip-rental loop bolsters startups' revenue ahead of IPOs and raises eyebrows over how much of Nvidia's own revenue flows through companies it partially owns, reported The Information.
Investors are also left guessing whether these rental costs offset reported revenue. Nvidia's dominance doesn't hinge on financial engineering – it's already selling every GPU it makes – but the lack of clarity makes the loop feel more like a black box than a strategy.
Nvidia may be building its own AI supply chain, but Wall Street wants to know if this is a moat – or a mirage.
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