The GPU-Backed Loan: Is the AI Data Center Boom Built on a House of Cards?

The AI data center build-out, as it stands, runs on two things: Nvidia chips and borrowed money. Now, in a startling financial feedback loop, the chips themselves are being used as collateral to borrow that money. This development casts a worrying light on the financial stability of the entire AI boom.

Nvidia isn't just a supplier in this ecosystem; it's a primary financial engine. According to PitchBook data, the company has made over 70 investments in AI companies in 2025 alone. A significant portion of these billions has been channeled into a critical category of its own customers: 'neoclouds,' a new breed of public cloud providers exemplified by firms like CoreWeave.

This creates a circular flow of capital that raises serious questions. Nvidia sells chips to a company, invests in that same company to fuel its growth, and that company then uses the highly-valued chips as collateral to secure more loans—often to buy more chips. While this accelerates growth in a bull market, it also concentrates risk. A downturn in the perceived value of GPUs could trigger a domino effect across this heavily leveraged system.