Nvidia has a new way to sell more AI chips: help customers buy them

GMI Cloud founder and CEO Alex Yeh.

GMI Cloud

Earlier this year, the AI startup Fireworks AI wanted to rent hundreds of millions of dollars' worth of AI compute.Rather than buying massive clusters of Nvidia's AI chips, known as GPUs, or renting from cloud giants like Amazon or Microsoft, some startups like Fireworks turn to specialized AI cloud providers — called neoclouds — for faster access to GPUs, more competitive pricing, and infrastructure specifically tailored to AI. Fireworks chose the neocloud GMI Cloud.There was a catch: To serve Fireworks, GMI first needed to buy the Nvidia GPU systems from a hardware manufacturer — and banks wouldn't provide the financing because Fireworks wasn't an investment-grade company.GMI founder and CEO Alex Yeh said they brought the problem to Nvidia and began discussing a new financing model around the beginning of this year. Yeh described it as an "insurance product" in which Nvidia agrees to step in if one of GMI's customers stops paying. In exchange, GMI shares a portion of its revenue with Nvidia.GMI told Business Insider it is committing $500 million to expand its AI infrastructure under this new financing model and said it's among the first neoclouds in Asia to employ it.The arrangement helps neoclouds secure loans they might not otherwise receive, while enabling Nvidia to bring more of its GPUs to market. Yeh said that rising memory prices also factor into the model's economics.Fireworks announced this month that it had raised $1.5 billion at a $17.5 billion valuation. Still, Yeh said banks have so far viewed frontier AI startups as non-investment-grade — though he added that the market is changing quickly.