FirstFT: Wall Street giants partner with Nvidia on $500bn AI funding package

Good morning and welcome to FirstFT. In today’s newsletter:

• Nvidia’s $500bn AI financing deal
• China’s ‘Ice Silk Road’ through the Arctic
• Hong Kong’s plan to clear rural villages for a new gateway to China
• Yen sinks as effect of US-Japan intervention fades

Nvidia’s $500bn AI financing deal

China’s ‘Ice Silk Road’ through the Arctic

Hong Kong’s plan to clear rural villages for a new gateway to China

Yen sinks as effect of US-Japan intervention fades

The world’s largest financial groups are working with Nvidia to assemble a funding package of more than $500bn for AI infrastructure development, in one of Wall Street’s most ambitious lending efforts to date.

A consortium of groups including Apollo Global, Blackstone, BlackRock, Brookfield Asset Management, Goldman Sachs and KKR is entering a partnership with Nvidia to invest in the AI build-out. Shares in the chipmaker fell about 1.1 per cent yesterday after the FT first reported on the arrangement, erasing nearly $60bn in market capitalisation.

Under the deal, which is still subject to final agreement, the firms will create dedicated pools of capital to finance Nvidia’s AI ambitions “at attractive rates for Nvidia customers”.

The partnership underscores Nvidia’s growing efforts to cultivate ties with Wall Street as a source of capital for itself and its clients to continue assembling the chips, power production and data centres at the heart of the AI boom. The $5.26tn company often provides financial backing to help its AI partners raise debt in capital markets, which helps boost Nvidia’s own revenue. However, the circular nature of such transactions has raised concerns about concentrated risks in the sector.

It also shows how Nvidia is building relationships with the giants of the private capital industry, which are collectively preparing to invest trillions of dollars of their insurance, retail and institutional investor assets into AI infrastructure.

• Mark Zuckerberg attacks ‘closed’ AI rivals: The Meta chief published an essay outlining a plan to distribute “free” AI to “billions of people” in an effort to “check and balance the power of institutions”.

Mark Zuckerberg attacks ‘closed’ AI rivals: The Meta chief published an essay outlining a plan to distribute “free” AI to “billions of people” in an effort to “check and balance the power of institutions”.

Here’s what else we’re keeping tabs on today:

• Economic data: Singapore publishes second-quarter GDP data.
• Monetary policy decision: The Reserve Bank of Australia is expected to hold interest rates steady.

Economic data: Singapore publishes second-quarter GDP data.

Monetary policy decision: The Reserve Bank of Australia is expected to hold interest rates steady.

Five more top stories

1. The Arctic is emerging as a viable alternative to the world’s traditional shipping routes as melting polar ice shortens the journey between Europe and Asia and vessels seek to avoid maritime chokepoints. Sea Legend, a Chinese container shipping company, will this week launch the first regular container shipping service through the Arctic.

2. Shein’s advisers are pitching the company to potential investors at a valuation below $30bn, a roughly 70 per cent drop from its peak, as the fast-fashion retailer battles to win investor interest in its long-awaited initial public offering. Chinese regulators last month approved the clothing giant’s application to list in Hong Kong.

3. A major earthquake killed at least 111 people in western Colombia yesterday morning, authorities said, with buildings flattened in several cities. The 7.4-magnitude earthquake came three days after President Abelardo de la Espriella was inaugurated in Cali, a city of 2.3mn people where buildings were reported collapsed, with people trapped in the rubble.

4. Donald Trump’s administration has provided a major funding boost to Australia’s hopes of unlocking non-Chinese supplies of a rare earth used in energy and defence applications with a $400mn loan to a Robert Friedland-backed company. Shares in Sunrise Energy, which is building a scandium mine about 360km (225 miles) west of Sydney, surged 18 per cent after the conditional US funding was announced.

5. Indonesian President Prabowo Subianto has nominated veteran economist Destry Damayanti to lead the country’s central bank. Destry’s nomination comes after the abrupt resignation of Bank Indonesia’s previous governor Perry Warjiyo late last month, which raised investor concerns over the bank’s independence.

Hong Kong plans a new gateway to China

Hong Kong is planning an ambitious project that will bring the territory and mainland China much closer together. A huge infrastructure initiative aims to transform a swath of Hong Kong’s New Territories — a ramble of fish farms, towns and brownfield sites — into an industrial and technology belt that will revive the Asian financial hub. For longtime residents, however, the plan means something more immediate: eviction. William Langley reports from Hong Kong.

We’re also reading . . .

• A summer for the ages: New York remains the world’s premier city, writes Ruchir Sharma.
• How the UAE won over Washington: The Gulf state has deployed a mixture of cash and charm to become one of America’s most important Middle East allies.
• Russia-Ukraine war: Russian army recruiters are resorting to increasingly coercive tactics, including snatching men off the street and tricking students into signing up.

A summer for the ages: New York remains the world’s premier city, writes Ruchir Sharma.

How the UAE won over Washington: The Gulf state has deployed a mixture of cash and charm to become one of America’s most important Middle East allies.

Russia-Ukraine war: Russian army recruiters are resorting to increasingly coercive tactics, including snatching men off the street and tricking students into signing up.

Chart of the day

The yen has given up roughly half its gains following the historic joint intervention by the US and Japan, with investors saying the lack of a “unified voice” among central banks lessened its market impact.

Take a break from the news . . .

Are games the meaning of life? To play a game is to be inefficient on purpose, writes C Thi Nguyen, philosophy professor at the University of Utah and an avid fly fisher. In the introduction to the Weekend FT’s summer puzzles special, he writes games “rub our faces in the value of difficult struggles, for their own sakes”.