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Morgan Stanley projects massive contingent liabilities could build up by 2028 as Nvidia deepens its role financing the AI boom it profits from
Nvidia doesn’t just sell the shovels in the AI gold rush anymore. It’s increasingly financing the miners, too.
Morgan Stanley initiated coverage of Nvidia’s credit profile with a neutral rating, projecting that the chipmaker’s total AI-related credit exposure could hit roughly $200 billion by the end of 2028. That figure includes around $170 billion in adjustments and contingent obligations that sit mostly off Nvidia’s balance sheet.
The circular financing problem #
The core concern is something analysts are calling “circular financing.” Nvidia makes chips. Nvidia also helps finance the companies buying those chips. When the entity purchasing your product partly exists because you’re bankrolling it, the revenue starts to look a little less organic.
In 2026 alone, Nvidia has been linked to financing arrangements exceeding $540 billion. A proposed $250 billion backing for OpenAI and a $500 billion compute-financing platform involving Apollo, BlackRock, and KKR together represent more than $750 billion in potential commitments. CEO Jensen Huang has pushed back on the framing, arguing that many of these structures involve mobilizing third-party capital rather than putting Nvidia’s own balance sheet on the line.
Contingent guarantees tied to OpenAI data-center leases alone could range between $105 billion and $250 billion.
Credit markets are already flinching #
On July 27, Nvidia’s five-year credit default swap spreads spiked to a record 82 basis points, the largest single-day jump since CDS trading on Nvidia began in November 2025.
Nvidia’s stock also fell roughly 5% on the news, briefly losing its position atop the global market-cap rankings.
Michael Burry, who famously shorted the housing market before 2008, and veteran short-seller Jim Chanos have both flagged concerns about Nvidia’s expanding credit footprint. Institutional heavyweights like the IMF and the Bank for International Settlements have also weighed in on systemic risks building within AI financing more broadly.
Strong fundamentals, uncomfortable parallels #
Nvidia’s conventional leverage sits at approximately 0.4x after Morgan Stanley’s adjustments. The company has taken equity stakes valued at roughly $42 to $43 billion in various AI ventures and has backstopped customer loans totaling around $3.5 billion.
Big Tech’s total off-balance-sheet AI commitments are estimated at approximately $1.65 trillion. Nvidia occupies a unique position because it sits at the intersection of supply and demand: it builds the hardware and increasingly underwrites the purchases of that hardware.
What to watch next #
Nvidia’s CDS spreads will be worth monitoring as a real-time barometer of how credit markets are digesting each new deal announcement. A sustained move higher in spreads, rather than a single-day spike, would suggest the market is repricing Nvidia’s risk profile in a more fundamental way.
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