WSJ: Nvidia Financed Startups to Buy Its Own Chips

What happened

According to the report, Huang privately described the pile of prepaid silicon and memory Nvidia had committed to buy from Taiwan Semiconductor Manufacturing Company as an 'avalanche': large cloud companies were shifting to their own custom chips, leaving Nvidia holding surplus orders. Rather than cut prices to clear the surplus, the company funded the customers that would absorb it.

At the center of the report is a tense meeting in August 2026 between Huang and longtime Chief Financial Officer Colette Kress, now interim chief executive after Huang's resignation. Kress pushed to rein in circular-financing commitments to smaller cloud providers and large AI firms such as OpenAI and Anthropic, while Huang pushed to expand them. Early discussions had floated underwriting roughly eight gigawatts of OpenAI computing capacity, valued at up to $250 billion; Kress scaled Nvidia's signed guarantee cap down to about 4.25 gigawatts, or up to $125 billion.

The report says Nvidia has since contacted TSMC to wind down upcoming chip orders. Nvidia reports third-quarter results on November 17, its first earnings since Huang's departure, with Kress presenting as interim chief executive.

Key facts

1. Report's source: The Wall Street Journal reported on November 13 that former Nvidia CEO Jensen Huang used the company's balance sheet to finance AI startups and data-center operators so they would keep buying its chips.
2. Scale of the glut: Huang privately called the prepaid silicon and memory backlog an 'avalanche'; SemiAnalysis, analyzing Nvidia's latest quarterly filing, put the company's total commitments and guarantees at about $530 billion, up from $184 billion a quarter earlier.
3. August meeting: In August 2026, CFO Colette Kress argued for reining in circular-financing exposure while Huang pushed to expand it; the OpenAI guarantee under discussion was cut from about 8 gigawatts, up to $250 billion, to about 4.25 gigawatts, up to $125 billion.
4. Receivables: The report says Nvidia's receivables had ballooned to $63 billion, while average payment terms stretched from 45 to 60 days.
5. Share reaction: Nvidia's shares fell 13% in the week the report emerged, wiping about $573 billion from the company's market value, its worst week since April 2025.
6. Company position: Nvidia has long rejected the circular-financing label.
7. Next step: Nvidia has contacted TSMC to wind down upcoming chip orders; third-quarter results are due November 17, presented by interim CEO Kress.