Big money for building big datacenters

Two AI infrastructure giants, Nvidia and Intel, are both raising staggering sums for the purpose of building more AI infrastructure—but they’re using two very different methods.

Intel just raised $20 billion through an equity offering of 210.5 million shares each priced at $95, above the $15 billion the company originally announced it was looking to raise yesterday. Intel will use the money, “for general corporate purposes, which may include, but are not limited to, capital expenditures and working capital,” according to a statement. Specifically, it wants to focus on investing in physical AI, advanced packaging, and purpose-built silicon.

The announcement comes on the heels of Intel’s Q2 earnings report last month, in which it revealed its fastest revenue growth in about 15 years. The company also raised its capex guidance to $20 billion, up from its previous $18 billion.

Nvidia rallies the Street

Intel, like many tech companies, can’t stop spending money on AI. And while Intel looks to the equity markets for cash, Jensen Huang is taking a different approach to raising capital.

Nvidia has signed a memorandum of understanding with six major investment firms to commit $500 billion in financing for—you guessed it—AI infrastructure. But these firms, featuring Blackstone, BlackRock, Apollo Global Management, Brookfield Asset Management, KKR, and Goldman Sachs, aren’t simply funding datacenters.

Essentially, the deal will use compute power itself as collateral, with AI infrastructure transformed into an “investable asset class.” The firms above will provide the money for companies that want to build out a datacenter and buy Nvidia’s chips, removing the chipmaker from the circular deals that has some investors worried that the AI trade is really just one big house of cards sitting on Nvidia’s shoulders.

“We await further details, but our first take is a positive one—the burden sits with the consortium, not NVDA’s balance sheet,” wrote Bank of America analyst Vivek Arya of the deal.

Sign of the times: At the same moment that investors have become increasingly skeptical about the amount of cash Big Tech is spending to build AI infrastructure, Wall Street is continuing to weave itself into the web of financing that’s propping up the massive datacenter boom.

A deal like this will either propel the AI trade to new heights, or send it tumbling down—and take some of the biggest names in finance down with it.—LB