Nvidia, CoreWeave, and Nebius: Inside the Circular Financing of the GPU Boom
Points and comments are a snapshot, not live.
Neoclouds like CoreWeave and Nebius rely on circular financing with Nvidia to fuel rapid AI infrastructure expansion.
Hyperscalers like Microsoft and Meta have committed over $120 billion to neoclouds CoreWeave and Nebius, which offer faster GPU deployment and higher utilization than internal builds. CoreWeave and Nebius have each secured 3.5 GW of contracted power but are spending heavily to convert it to active capacity, leading to negative free cash flow and rising debt. Nvidia has invested $2 billion in each and provides a $6.3 billion backstop against unsold capacity for CoreWeave, creating a circular financing loop where neoclouds use Nvidia's investment to buy more Nvidia GPUs.
This arrangement lets hyperscalers shift capital expenditure to operating expenses, while neoclouds bear the massive funding burden, raising concerns about long-term sustainability as they burn cash and take on debt to meet demand.
What commenters are saying
Top commenters argue the circular financing is overstated, noting Nvidia's $2 billion stake is only 5.7% of CoreWeave's 2026 capital expenditure. They explain Nvidia invests in neoclouds as a hedge against hyperscalers designing their own chips, and neoclouds give hyperscalers competition.
Others highlight a deeper concern: the model inflates figures when neoclouds take on debt backed by long-term contracts, and Nvidia's backstop against unsold capacity creates perverse incentives to over-order GPUs. Commenters note this strategy is not new but that the scale is unprecedented, with valuations having priced in years of future profit that hasn't materialized.