Nvidia’s chief financial officer has confirmed that a significant slice of the company’s future revenue will come from the very labs it is helping to fund. Colette Kress told analysts on August 26 that demand from AI labs Nvidia supports with its own balance sheet will contribute roughly a quarter of its business next year.
The disclosure puts a number on what critics call a circular financing loop. Nvidia has put nearly US$50 billion into AI labs that buy its chips, and has lined up commitments for more than $500 billion. According to Financial Times, Kress said demand from AI labs that Nvidia is leveraging its "balance sheet" to support would contribute roughly a quarter of its business next year.
What Circular Financing Means for Nvidia
The loop is simple to describe. Nvidia invests in an AI lab. The lab uses that money, or the credit Nvidia’s involvement unlocks, to buy Nvidia chips. That purchase shows up as revenue for Nvidia, which can then invest more into other labs.
Nvidia used the phrase "circular financing" before any analyst did. Kress said on the earnings call that the company recognised the scale of the support it was providing and knew some would call it circular financing. She said Nvidia sees it differently.
Why This Matters for Investors
For investors, the key question is whether this revenue is sustainable. If Nvidia’s own investments are driving a quarter of next year’s business, then the company’s growth is partly self-funded rather than coming purely from outside demand.
According to Fortune, Nvidia is defending against "circular financing" doomsayers even as it unleashes strong growth numbers. The company argues that its investments are helping build the AI ecosystem, not just propping up its own sales.
"The company recognised the scale of the support it was providing and knew some would call it circular financing. She said Nvidia sees it differently." — Financial Times
Our Take: The Risk Behind the Numbers
To put it plainly, this is a story about how much of Nvidia’s growth is real versus self-created. A quarter of next year’s business coming from labs the company finances is a large number. It means Nvidia is not just selling chips — it is also creating the demand for those chips.
That is not necessarily wrong. Many tech companies invest in their own ecosystems. But the scale here is unusual. Nearly $50 billion in investments, with more than $500 billion in commitments, is enough to move markets on its own.
Investors should watch whether these labs can generate real revenue from their AI work. If they can, Nvidia’s circular financing is a smart bet on the future. If they cannot, the loop could unwind quickly, and a quarter of Nvidia’s business could disappear overnight.
Nvidia’s defence is that it sees this differently — as building the infrastructure for AI rather than just selling into it. That may be true. But the distinction matters less than the outcome. If the labs succeed, everyone wins. If they fail, Nvidia’s books will show the cost.
