Syz the moment

Nvidia is reportedly forming a major AI infrastructure investment partnership with some of the world’s largest private-capital firms, including Apollo, Blackstone, BlackRock, Brookfield, Goldman Sachs and KKR. The objective: mobilise huge pools of private capital to finance the chips, data centres and power infrastructure required for the AI build-out. The scale is enormous: Morgan Stanley estimates hyperscalers will spend $3.5 trillion between 2026 and 2028, while Apollo believes total AI infrastructure investment could eventually exceed $8 trillion. Nvidia is moving beyond selling GPUs. It is increasingly helping customers finance the infrastructure needed to buy and deploy its chips—including providing financial backing and potentially guarantees. Nvidia is separately discussing a massive guarantee for a 10GW Ohio data-centre project leased to OpenAI, highlighting how deeply it could become involved in financing the AI ecosystem. Private capital is becoming critical. AI investment requirements are now too large to be financed through corporate cash flows alone, pushing tech companies toward private credit, bonds, securitisation, project finance and equity. The risk: Nvidia financing or guaranteeing customers that ultimately purchase Nvidia chips creates concerns around “circular financing” and increasingly concentrated financial exposure across the AI ecosystem. Bottom line: Nvidia is evolving from the AI boom’s dominant chip supplier into something closer to its financial architect. Partnering with private-capital giants could unlock trillions for AI infrastructure—but also further intertwines Nvidia’s financial fortunes with the customers driving its extraordinary revenue growth. Source: FT

Source: Barchart

The “Big Short” investor has re-entered OTM put options on Palantir, buying March 2027 puts with strikes in the low-to-mid $100s. Burry sees Palantir falling below $1 in the long run. Palantir just jumped nearly +40% after strong quarterly results. Source: Bull Theory

Jensen Huang calls compute “an investable asset.” But there’s another chart worth watching: Nvidia’s credit risk is rising. NVDA’s 5-year CDS has jumped nearly 6 basis points recently. More strikingly, the cost of insuring Nvidia’s debt has almost doubled since late May, rising from 41.6 bps to 77.5 bps—just below the July 29 record of 83.7 bps. At first glance, that seems counterintuitive. Nvidia could potentially unlock hundreds of billions of dollars of additional demand without putting that financing directly on its own balance sheet. That should be positive for Nvidia. But the CDS market may be highlighting the other side of the story: the AI boom is becoming increasingly dependent on leverage. More capital. More infrastructure. More financing. The demand is real—but so is the financial engineering supporting it. Source: Bloomberg, HolgerZ

Riot shares surged +25% in after-hours trading after the news. Riot will supply 191 megawatts of computing from its Rockdale, Texas campus - enough to power roughly 143,000 homes. The contract runs 20 years, through June 2048. It can be extended twice, by five years each, pushing total sales as high as $16.1 billion. Source: Bull Theory

Microsoft plans to unveil Maia 300 as soon as September and ultimately wants capacity for 1M+ chips. The goal is to reduce reliance on Nvidia and win major Azure customers like Anthropic. Its current Maia 200 chips are already 30%-40% cheaper to operate than cutting-edge Nvidia chips for OpenAI and Microsoft models. Source: The Information, Wall St Engine

Source: Charlie Bilello

“Profit margins are probably the most mean-reverting series in finance, and if profit margins don't mean revert, then something has gone badly wrong with capitalism. If high profits don't attract competition, there's something wrong with the system.” - Jeremy Grantham Source: Charlie Bilello @charliebilello