Nvidia's self-funded AI loop

Core Insights - Nvidia is positioning itself as a major player in the AI ecosystem, not only through chip production but also by acting as a financier for AI startups [1][2] - The company plans to invest $2 billion in Elon Musk's S XAI as part of a larger $20 billion funding round, indicating a strong commitment to supporting AI ventures [2] - Nvidia has accumulated over $100 billion in exposure across the AI ecosystem, which includes investments in over 100 AI startups and significant commitments to companies like OpenAI [4] Investment Strategy - Nvidia's investment strategy involves multiple roles, including being a supplier of chips, an equity investor, a financier with buyback guarantees, and a customer purchasing cloud services [5] - The deal with XAI exemplifies Nvidia's dual role as both an investor and supplier, financing a company that will purchase its own products, thereby creating a circular revenue model [6][7] - The financing structure of the XAI deal introduces a form of asset-backed securities, where the collateral is based on depreciating GPU compute capacity, raising questions about the sustainability of this model [6]