From Selling Chips to Leasing Data Centers: Nvidia's $50 Billion Data Center Lease Revealed

Nvidia is making an unprecedented bet on AI infrastructure, but the resulting concerns in the credit markets are rising in tandem.

According to the Financial Times, citing five sources on Tuesday, Nvidia has signed leases worth up to $50 billion, making it a tenant of Hut 8’s data center campus in Texas.

The day before this news was released, Nvidia's stock price plunged nearly 5%, losing its position as the world's largest company by market value; in the credit markets, Nvidia's five-year credit default swaps (CDS) spiked intraday by the most since the product became actively traded, reflecting rising concerns about the scale of AI financing obligations Nvidia is shouldering.

A Nvidia spokesperson neither confirmed nor denied the above lease report, only stating that the company is working through DSX AI factory architecture with ecosystem partners to accelerate the deployment of efficient AI infrastructure. Hut 8 had not responded to Reuters’ request for comment as of press time.

Last week, Hut 8 disclosed that its 1GW Beacon Point campus has signed a 15-year base term long-term contract valued at $19.6 billion, with total value rising to $50.2 billion if all renewal options are exercised. At that time, Hut 8 did not reveal the tenant’s identity, but only described them as a “current investment-grade client,” who will deploy computing equipment at the campus to support large-scale AI training and operations.

The Financial Times, citing sources, said the tenant was Nvidia. The report also noted that Nvidia may sublease the property to its “neocloud” partners—these partners purchase Nvidia GPUs and sell AI cloud computing services to the market.

A Nvidia spokesperson said DSX is the company’s full-stack architecture integrating its own technology with partner hardware, for designing, building, and operating large-scale AI data centers.

Meanwhile, Nvidia’s credit market signals are drawing attention. According to ICE Data Services, Nvidia's five-year CDS jumped intraday by about 14 basis points on Monday, reaching around 82 basis points per annum—the largest intraday jump since the contract became actively traded in November last year.

This move comes amid a flurry of major financing headlines. Last week, Nvidia said its collaboration with SK Hynix’s parent company is valued at over $500 billion. Additionally, Nvidia is in talks to offer guarantees of up to $250 billion for OpenAI, helping it lease data center compute capacity in the U.S.—potentially one of the largest financing deals between the company and a customer. Nvidia is also in talks regarding financing for OpenAI to procure chips for a $350 billion project in the U.S.

“The capital expenditure required to build AI infrastructure is extremely large, and the debt market is being flooded with massive supply,” said Sal Naro, Chief Investment Officer at Coherence Credit Strategies. “Opaque, off-balance-sheet deals and ‘financial alchemy’ driven by inter-company relationships are worrying and could potentially lead to a downgrade of credit ratings.”

Critics have for months warned about the circular nature of these transactions: Nvidia provides financing or equity to some companies, which in turn often buy or use Nvidia chips. The risk of such arrangements is that they may distort commercial incentives, leading to misallocation, and if AI demand falls short of expectations, the resulting losses could be amplified.

Notably, this type of financing often relies on investment-grade ratings to be arranged, while fast-cash-burning AI firms like OpenAI and Anthropic find it difficult to attain such ratings. Endorsements and support from large corporates are key to enabling high ratings for such AI infrastructure debt.

“While Nvidia’s investments and partnerships bolster market confidence in long-term AI infrastructure building, investors remain concerned about circular financing issues,” said Gary Tan, Portfolio Manager at Allspring Global Investments, “and increasingly more capital is being used to finance future AI customers and infrastructure deployment.”

As Nvidia's financial involvement in AI infrastructure continues to expand, divergent trends in the credit and equity markets may become a key indicator for investors to assess the chip giant's risk exposure.