On Monday, Nvidia announced memorandums of understanding with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR to mobilize more than $500 billion of third-party capital so that hyperscalers, frontier labs, and enterprises can borrow against AI hardware instead of paying cash for it. Jensen Huang told CNBC this is the first time technology chips have become an investable asset class and described the chips as productive, long-lived, fungible, and flexible. This is PROBABLY all correct, but I think it misses something cool.
In the same announcement, Nvidia told bond buyers that CUDA keeps extending the useful life of the hardware and improving its economics over time. EXTENDING THE USEFUL LIFE. Nvidia has just informed the largest capital allocators on earth that its software support policy is the collateral.
The pitch is a hundred and fifty years old
As always (it seems), everything old is new. Productive, long-lived, fungible, transferable across operators (aka STUFF) is the pitch for rolling stock — is decidedly pretty well understood. In the 19th century, equipment trust certificates put locomotives and freight cars into a trust that leased them back to the railroad, which meant that when the railroad went under, the equipment was not railroad property and did not go into the estate. (By the way, if you'd like to read an excellent book on the subject, let me recommend RailRoaded. In an era when American railroads failed constantly, equipment trust paper was among the safest debt you could hold. This is convenient! Because, many many many people think we're in a world where things are going to go bankrupt (soon-ish?), so the fact that the structure Nvidia is using having been stress-tested across a century and a half of bankruptcies is quite nice.
