SoftBank Corp.

he Most Expensive Guarantee in History: A Scale That Is Difficult to Imagine

Monday began with news that would have sounded like science fiction only a few years ago. NVDA ... —the chipmaker whose technology has become indispensable to virtually every major artificial intelligence project—is reportedly in talks to provide OpenAI with a financial guarantee worth approximately $250 billion. This is not merely a large transaction; it could become one of the most ambitious financial arrangements in the history of the technology industry.

Should the agreement be finalized, the financing would allow OpenAI to lease an enormous 10-gigawatt data center that SoftBank is building in southern Ohio. For comparison, 10 gigawatts is enough electricity to power several million homes. The total cost of the project is estimated to exceed $500 billion, including the Nvidia chips that would be installed inside the data center.

However, the most remarkable aspect of this story is not simply the astronomical figures but the structure of the proposed deal itself. Nvidia would not provide the money directly to OpenAI. Instead, it would act as a guarantor, effectively backing OpenAI’s obligations to lenders.

As a privately held company that is not yet profitable, OpenAI does not have an investment-grade credit rating. This makes it extremely difficult for the company to secure massive loans on favorable terms. Nvidia’s guarantee would reduce the risks faced by banks and other lenders, allowing them to finance the construction project at lower interest rates.

At the same time, the guarantee would cover only the construction and leasing of the data center—not the purchase of Nvidia’s chips. A separate agreement for the processors could reportedly be worth as much as $350 billion.

The result resembles a circular financing arrangement: Nvidia guarantees the funding for OpenAI’s infrastructure, while OpenAI uses that infrastructure funding to...