Nvidia Funded Startups to Buy Its Own Chips: What It Means for the Stock
Nvidia financed AI startups to absorb excess chips instead of cutting prices, a Wall Street Journal report says, as shares fell 13% in a week.
Image: Wikimedia Commons / Joseph Zadeh
SANTA CLARA, California — Nvidia used its own balance sheet to finance artificial-intelligence startups and data-centre operators so they would keep buying its chips instead of letting prices fall, according to a Wall Street Journal report, as the chipmaker closed its worst week since April 2025, down 13% and $573 billion in market value.
The report says the financing answered a glut of silicon and memory Nvidia had ordered from Taiwan Semiconductor Manufacturing Company. Instead of cutting prices to clear the surplus, the company funded the customers that would absorb it — circular financing, because Nvidia’s money helped buyers purchase its own products.
Key Takeaways
- Nvidia financed AI startups to absorb excess TSMC chips rather than cut prices, according to a Wall Street Journal report.
- Colette Kress, now interim chief executive, pushed back in August, cutting a proposed OpenAI guarantee from about $250 billion to $125 billion.
- Nvidia’s filing shows commitments and guarantees of about $530 billion, up from $184 billion a quarter earlier.
- Shares fell 2% on Friday to $162.85, closing a 13% weekly drop that erased $573 billion.
How the Startup Funding Worked and Why Kress Objected
The report describes a tense meeting in August 2026 between Huang and Kress, in which Kress argued for reining in exposure to smaller cloud providers and large AI firms such as OpenAI and Anthropic. Huang pushed the other way, the report says, and privately acknowledged that the largest cloud companies were moving toward their own custom chips rather than Nvidia’s graphics processors.
PitchBook data cited by TechCrunch shows the scale: Nvidia took part in 105 startup investment rounds this year, including an $800 million cheque into Reflection AI. The Information and CNBC have separately reported that Kress opposed the OpenAI financing backstop, and the $500 billion financing platform Nvidia announced in August has produced no deals so far.
Why Nvidia Shares Fell 13% in a Week
Nvidia shares fell 2% on Friday to $162.85, a day after Huang resigned on Thursday, November 12. The stock has now fallen for six straight weeks, its longest run since October 2012, and its market value has dropped below $4 trillion from about $5.8 trillion in early October. The Philadelphia Semiconductor Index fell 3.4% on Friday, with Advanced Micro Devices down 8.8% and Broadcom down 4.8%. October producer prices rose 6.5% on the year, the most since November 2022.
| Index | Close | Friday | Week |
|---|---|---|---|
| Dow Jones Industrial Average | 52,347.55 | +0.10% | +2.07% |
| S&P 500 | 7,561.67 | -0.40% | +2.51% |
| Nasdaq Composite | 25,136.27 | -0.91% | +2.27% |
| Nvidia | $162.85 | -2.0% | -13% |
What November 17 Earnings Will Show
Nvidia reports third-quarter results on Tuesday, November 17, the first since Huang’s departure, with Kress presenting as interim chief executive. SemiAnalysis, analysing Note 10 of Nvidia’s Form 10-Q, put total commitments and guarantees at about $530 billion, up from $184 billion a quarter earlier, including $279 billion of supply and capacity purchase obligations and $108.5 billion of maximum gross guarantee exposure.
The board is also searching for a permanent chief executive and has approached Arm chief executive Rene Haas as one of several candidates, though it says any speculation is premature. Whether Kress scales back the financing pipeline will shape how much of Nvidia’s demand investors treat as durable, and the answer starts to arrive on Tuesday.
Frequently Asked Questions
Did Nvidia fund startups to buy its own GPUs?
A Wall Street Journal report says Nvidia financed AI startups to absorb excess chips ordered from TSMC, rather than let prices fall. Separate reporting and the filing back the scale: 105 startup rounds this year and about $530 billion in commitments and guarantees.
How much has Nvidia stock fallen since Huang resigned?
Shares fell 2% on Friday to $162.85, a day after falling 4.3% on the resignation. For the week, the stock dropped 13%, erasing $573 billion — its worst week since April 2025 and its sixth straight weekly decline.
What are Nvidia’s $530 billion in commitments?
The figure comes from Note 10 of Nvidia’s Form 10-Q, as analysed by SemiAnalysis. It includes $279 billion of long-term supply and capacity purchase obligations and $108.5 billion of maximum gross guarantee exposure, including up to $105 billion tied to one Ohio data centre leased to an OpenAI affiliate.
When does Nvidia report earnings, and who will present the results?
Nvidia reports third-quarter results on Tuesday, November 17, the first report since Huang resigned. Colette Kress, the chief financial officer serving as interim chief executive, will present the results.
