The AI industry just got even more expensive.
NVIDIA just announced a new partnership with six financial institutions that would provide the chip company with $500 billion in third-party capital to put toward AI infrastructure
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Today, we are helping create a new class of productive, investable infrastructure: AI factories,” said Jensen Huang, CEO and founder of NVIDIA, in the company’s press release. “We are bringing the world’s leading long-term capital providers together to independently underwrite AI infrastructure.” AI companies have been pursuing aggressive growth recently, and it’s showing in their capital expenditures. Alphabet and Amazon are both forecasting capex in the hundreds of billions of dollars, while Tesla is expecting to more than double its capex this year. “We should be spending on capex as fast as we can spend, as fast as we can without it being too wasteful,” Tesla CEO Elon Musk said during a recent earnings call. “It’s OK to be a little less capital efficient if we get things done sooner.” But will all this spending pay off for AI companies? And how does this spending impact your portfolio’s bottom line?