Nvidia's New CEO Opposed a $250 Billion Guarantee for OpenAI

Nvidia's board announced Jensen Huang's resignation on November 12 and named finance chief Colette Kress interim CEO. In the same days, The Information reported that Kress had opposed Huang's largest financing commitments.

The proposal she opposed was a $250 billion guarantee that would have let OpenAI fill 8 gigawatts of data-center space with Nvidia chips. Nvidia did not comment on the report. The stock closed Friday at $162.85 and has lost 27.3% over the past month.

How Much Nvidia Has Guaranteed for Customers

Nvidia's 10-Q for the quarter ended July 26 lists three items. There is a $36 billion commitment to buy capacity from AI cloud providers. There is $20 billion of data-center leases signed to be handed to third parties.

The third item is direct guarantees, with a maximum of $108.5 billion. Of that, $105 billion is the OpenAI Ohio campus guarantee disclosed in an 8-K dated August 17. By XenoSpectrum's count, the three items total 71.8% of Nvidia's $228.98 billion in shareholders' equity.

FinanceFeeds tallies the same book at $286 billion because it adds a $125 billion bank credit program. The two totals measure different scopes; one does not contradict the other.

How $250 Billion Became $105 Billion

On August 14, Reuters, citing the WSJ, reported that Nvidia would cut the guarantee from $250 billion to less than $120 billion. It would cover only the project's first phase. The 8-K three days later set the cap at $105 billion, covering 4.25 gigawatts.

The guarantee covers facilities that SB Energy leases to OpenAI. It takes effect as each lease begins and runs for up to 20 years; the first facility is expected in Nvidia's fiscal 2029. Sources do not say whether Kress's objection drove the reduction.

The market read Huang's resignation as a management story. Shareholders of AI cloud providers read it as a story about their guarantor.

What a Guarantor Is Worth to a Borrower

A guarantor pulls a borrower's credit toward its own. According to bond data compiled by XenoSpectrum, Nvidia borrowed in June at an effective rate of 4.60%. CoreWeave sold notes in April with a 9.75% coupon.

The math shows why the guarantees are in such demand. Without handing over cash, Nvidia can cut a customer's interest bill roughly in half with its signature. The price is an obligation that appears only in a bad scenario and stays off the balance sheet.

Adil Malik, a partner at Origin Partners, told CNBC that Nvidia now wants a binding purchase commitment before it guarantees a client. Until about three months ago, he said, a non-binding letter of intent was enough.

AI Cloud Stocks Are Pricing the Guarantor

According to FinanceFeeds, on the afternoon of November 12, CoreWeave was down 7%, IREN 8% and Nebius 17%. Nebius's drop also reflected its own weak guidance.

Per CNBC, citing LSEG data, the cost of insuring CoreWeave's debt rose 94% between October 1 and November 5. Columbia's Stijn Van Nieuwerburgh says the guarantees would come into question only if Nvidia neared collapse.

The chart covers the resignation week and the scandal weeks before it together; on its own, it does not isolate the effect of the guarantees.

What It Means for Investors

• The market is pricing that signed guarantees will hold; the chance that no large new guarantee comes is priced only in AI cloud stocks.
• The most exposed names are CoreWeave, Nebius and IREN, which borrow on the back of Nvidia guarantees; companies tied to OpenAI through lease income sit on the same line.
• On November 17, watch what Kress says about guarantee policy, and where the 71.8% ratio goes in the next 10-Q.
• The risk to this view is a large AI cloud financing closing at a reasonable rate without Nvidia's support, which would show the guarantor is no longer needed.

For how to read an earnings day, see How to Read Earnings Day; for footnotes in the 10-Q, see the 10-K and 10-Q guide.

Sources: The commitment amounts come from Nvidia's 10-Q published August 26 and its 8-K dated August 17, as relayed by XenoSpectrum and Forbes. The guarantee reduction is based on Reuters' August 14 report citing the WSJ. Kress's objection comes from The Information's anonymously sourced report, as relayed by 247 Wall St. and TokenPost. Stock and credit-insurance data come from a CNBC report relayed by FinanceFeeds; the SEC filings could not be accessed directly.