The deal structure is complex. Nvidia signed multiple residual-value guarantees with SB Energy, the SoftBank-backed developer, covering about 4.25 gigawatts of computing capacity at the PORTS Technology Campus in Ohio. OpenAI will be the tenant under a 20-year lease, deploying Nvidia's DSX AI factory platform. If OpenAI defaults, Nvidia must cover the shortfall between the guaranteed lease value and whatever SB Energy recovers by reletting or selling the facility. The chipmaker also invested $1.5 billion directly in SB Energy.
But the final figure tells a story of how the market disciplined Nvidia.
$250B → $105B: The Market Spoke. Nvidia Listened.
When the $250 billion plan first surfaced in July, Nvidia's stock dropped 5% in a single day. Investors made their position clear: a chipmaker should not use its balance sheet to guarantee a customer's real estate.
By August 16, reports put the figure at "under $120 billion." The final number landed at $105 billion. Each step down was a concession to market sentiment. Nvidia is still providing enormous credit support—enough to cover the largest data center project ever publicly disclosed—but it is also signaling that it heard the warning.
The figure also changed the project's shape. The $250 billion plan would have covered the full 10-gigawatt campus. The $105 billion guarantee covers only the initial 4.25 gigawatts, with the remaining 3.75 gigawatts discretionary. The guarantee is also capped at roughly 25% of the project's total financing. Nvidia is not underwriting the entire project anymore.
The Loop Is Still There. Nvidia Just Shrank It.
Jensen Huang addressed the criticism directly in a post on Nvidia's website, denying that the arrangement is "circular financing." His logic: OpenAI pays rent. Nvidia's guarantee is only triggered if OpenAI defaults. Nvidia's risk decreases as capacity comes online and rent payments flow.
But the structure still raises the circular financing question that has dogged Nvidia all year. Nvidia provides credit support. OpenAI uses that support to secure data center capacity. That capacity is filled with Nvidia chips. The chip sales generate revenue that strengthens Nvidia's balance sheet, enabling it to support more deals. The loop is not as tight as a direct "lend-to-buy" arrangement, but it remains recognizable.
AJ Bell financial analysis head Danni Hewson called some degree of circular financing "inevitable" given how concentrated the AI infrastructure market is. The question is not whether it exists—it's whether it becomes a systemic risk.
"Dark Fiber" Happened to Telecom. Nvidia Is Betting on AI.
White House tech advisor David Sacks raised a separate concern: "dark GPU" risk. In the early 2000s, telecom companies overbuilt fiber-optic networks that went unused—"dark fiber" that destroyed investor returns. Sacks warned that a similar glut of GPU capacity could hit the AI infrastructure market if demand doesn't meet expectations.
The $105 billion guarantee is, in part, a hedge against that risk. By reducing its exposure and capping its obligations, Nvidia is protecting itself from being left holding the bag if the AI boom cools. But the project is still moving forward—a signal that Huang still believes demand will fill the capacity.
The Market Is Now Setting the Terms
The $105 billion guarantee is a compromise between two forces: Nvidia's desire to lock in long-term chip demand, and the market's refusal to let the company take unlimited balance-sheet risk. Huang is still pushing forward with the AI infrastructure buildout—the project will deploy roughly 1.5 million Nvidia GPUs and generate $150 billion to $200 billion in chip revenue for the company. But he is doing it with a smaller footprint of his own capital.
The market is now setting the terms. And for the first time, Nvidia is accepting them.
P.S. Capacity is expected to come online in 2028, with phased deployment through 2030. The first test of whether this deal made financial sense won't come until OpenAI's first rent check clears. If it does, the structure may become a template for future AI infrastructure projects. If it doesn't, the guarantee will have saved Nvidia's critics the trouble of explaining why they were right.
Frequently Asked Questions
Q: What exactly did Nvidia guarantee for OpenAI?
A: Nvidia agreed to backstop up to $105 billion in lease obligations for OpenAI's Ohio data center. If OpenAI defaults, Nvidia covers the shortfall. The guarantee is capped at about 25% of the project's total financing.
Q: How did the number change from initial reports?
A: The initial plan was $250 billion for the full 10-gigawatt campus. After market pressure, reports in August said "under $120 billion." The final number was $105 billion.
Q: What does Nvidia get from the deal?
A: Nvidia secures a 20-year commitment to supply chips for the data center—roughly 1.5 million GPUs, generating an estimated $150-200 billion in chip revenue.
Q: How much of the project does the guarantee cover?
A: The guarantee covers the first 4.25 gigawatts of capacity under a 20-year lease. The remaining 3.75 gigawatts are discretionary.
Q: Does Nvidia own the data center?
A: No. The facility is being developed by SB Energy, a SoftBank-backed company. OpenAI is the tenant. Nvidia is the chip supplier and guarantee provider.
Q: What is the "circular financing" concern?
A: Critics argue the deal creates a loop: Nvidia provides credit support, OpenAI secures capacity, that capacity is filled with Nvidia chips, and chip revenue strengthens Nvidia's balance sheet for more deals. Nvidia disputes this characterization.
Q: What is the "dark GPU" risk?
A: White House tech advisor David Sacks warned that AI infrastructure could repeat the early-2000s "dark fiber" telecom crash, where overbuilt networks went unused and destroyed investor returns.
Q: What does the guarantee cover exactly?
A: It covers lease obligations if OpenAI defaults. Nvidia is on the hook for the shortfall between the guaranteed lease value and what SB Energy recovers by reletting or selling the facility.
Q: When will the data center come online?
A: Capacity is expected online in 2028, with phased deployment through 2030.
Q: What is the significance of this deal?
A: The deal marks a shift: Nvidia is now using its balance sheet to lock in long-term chip demand. It also shows the market is willing to discipline the company when it overreaches.
