WARNING: Nvidia turning chips into mortgage market, “I’ve seen this movie before”: deVere CEO

Nvidia, the world’s most valuable company, just turned its chips into a mortgage market, and “I’ve seen this movie before”, warns the CEO of one of the world’s largest independent financial advisory organisations.

Nigel Green of deVere Group’s comments come as Nvidia announced strategic partnerships with selected financial institutions to mobilise more than $500 billion in third-party capital for AI infrastructure, treating compute the way lenders traditionally treat commercial real estate or toll roads.

Nvidia CEO Jensen Huang said in an interview this marks the first time technology chips have become an investable asset class.

Nigel Green comments: “What Nvidia has done here is elegant, and that is exactly what worries me.

“Chips have never been treated as a bankable, long-duration asset before, because chips depreciate fast and lose value the moment a newer generation arrives.

“Turning that into something institutions can lend against, the way they lend against a building or a highway, only works if the underlying asset actually holds its value over time.”

He continues: “This is not simply Nvidia selling chips anymore, it’s Nvidia helping its own customers borrow enormous sums to buy those chips, then helping structure the financing that makes the borrowing possible in the first place.

“When the seller starts underwriting the buyer’s debt, at this scale, that’s worth watching closely.”

Hyperscalers have already borrowed roughly $250 billion this year alone, several times their normal annual borrowing.

Layering another $500 billion in financing on top of that is a genuinely large amount of leverage building on leverage, all resting on the assumption that AI infrastructure keeps generating returns fast enough to justify the debt.”

The deVere CEO explains: “I keep thinking about the years leading into the 2008 financial crisis.

“Loans were packaged, leveraged, and sold on the assumption that the underlying asset would hold or increase in value.

“When that assumption failed, the leverage amplified the losses rather than the gains. This is a different asset and a different market, but the underlying structure, borrowing heavily against something whose future value is genuinely uncertain, deserves the same scrutiny.”

He says: “None of this means it fails. If AI adoption keeps accelerating and these data centres keep generating the revenue Nvidia expects, this financing structure could work exactly as intended, and some companies stand to make very large profits from it.

“Jensen Huang’s argument that compute is now infrastructure, similar to electricity or the internet, is not unreasonable on its face.”

He warns: “The risk sits entirely on the uncertainty. GPUs have historically been viewed as rapidly depreciating hardware, and newer chip generations arrive on a fast cycle.

“Borrowing long-term against an asset with a genuinely uncertain shelf life is a real gamble, even when the borrowing is dressed up in the language of infrastructure investment.”

Nigel Green concludes: “This is why investors need to be genuinely careful right now about where their money sits within the AI trade.

“There’s a real difference between owning the infrastructure and technology generating durable returns, and owning exposure to the debt piled on top of assets that may or may not hold their value as long as everyone is currently assuming.

“Talk to a financial advisor, understand exactly what you are exposed to, and do not assume every part of this trade carries the same risk simply because the numbers involved are enormous.”