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Nvidia is in talks to provide a $250 billion financing guarantee for OpenAI's data center buildout.

Nvidia is currently negotiating a potential $250 billion financing guarantee to support OpenAI's construction of a 10-gigawatt data center campus in Ohio. The deal would provide a backstop for the project's lease and construction debt, rather than just the chips themselves. This move has sparked concerns regarding "circular financing," where the seller of the hardware provides the funding for the customer who then purchases the hardware. Market reactions were immediate, with Nvidia shares falling over 4% on Monday. The selloff extended to other major semiconductor stocks, including Advanced Micro Devices, which dropped 8%, and Dell Technologies, which fell 4%. Investors are closely watching these developments to determine if the AI boom is fueled by organic demand or by the fact that the seller is funding the buyer. While the fundamental numbers remain strong, analysts are looking for confirmation on whether these massive investments will generate adequate returns to justify the high capital expenditure.

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