Nvidia Reportedly in Talks to Invest Hundreds of Millions of Dollars in Australian AI Cloud Provider Firmus

After failing to stabilize the market by verbally endorsing CoreWeave, one of its key portfolio companies, the chip giant is reportedly planning to inject hundreds of millions of dollars into another struggling Australian AI cloud service provider, Firmus Grid.

According to a report by The Information on Tuesday, Nvidia is in negotiations with Firmus over an investment in the hundreds of millions of dollars. Firmus, which earlier this month saw its plan for an IPO at a $30 billion valuation falter, is seeking at least $2 billion in private financing. Nvidia had already participated in its last three funding rounds and is one of the company's major shareholders.

The potential additional investment would be Nvidia's latest move to signal to the outside world that, amid a massive selloff in AI stocks, it is willing to support the entire ecosystem with real money rather than words. The financing environment for AI data center operators is deteriorating sharply, public-market investor confidence remains under pressure, and whether Nvidia's strategic capital injection can truly reverse the downturn remains the core question for the market.

Firmus IPO Fails, Nvidia Steps In

Firmus's path to listing ended in failure, becoming one of the triggers for this round of AI stock selling.

The seven-year-old Australian company had planned to list on the Australian Securities Exchange at a $30 billion valuation, aiming to raise $5 billion, but ultimately withdrew its application citing "market volatility." According to reports, investors generally viewed its valuation as too high and too speculative, seriously out of line with Firmus's current revenue scale and planned data center capacity.

Firmus's major investors include Blackstone, Coatue Management and Jane Street. In terms of financing structure, the company has raised more than $13 billion to date, of which about $10 billion is debt financing. Nvidia had already been deeply tied to Firmus under its credit support program—in June this year, Nvidia agreed to provide credit backing for Firmus's purchase of at least 170,000 Rubin and Blackwell GPU server racks to make it easier for the company to obtain debt financing. The server racks are valued at about $15 billion and will be deployed at a facility built by Singapore data center developer DayOne on Batam Island, Indonesia.

After the IPO failed, Firmus is seeking at least $2 billion in private financing. According to The Information, citing people familiar with the matter, Nvidia had originally been prepared to commit substantial capital in the IPO, and the size of Nvidia's investment in this private financing may still change, and the financing could also fall through.

Nvidia's Logic: Every Dollar Invested Is Paying for Itself

Nvidia's continued funding of neoclouds has a clear business logic behind it.

Hyperscale cloud providers such as Google, Microsoft and Amazon are accelerating in-house chip development to reduce their dependence on Nvidia, and neoclouds are precisely an important pillar of demand for Nvidia GPUs. The logic behind Nvidia's additional investment in Firmus is straightforward: every extra dollar Jensen Huang invests helps a customer buy one more chip.

According to The Information's analysis, Nvidia has provided more than $170 billion in credit guarantees and capital support to neoclouds and other major customers. As of July this year, Nvidia's holdings of non-listed securities—mainly equity in private companies—had reached $51.2 billion, more than double the level six months earlier.

To sustain this ecosystem, Nvidia is also adjusting the way it provides support. According to executives familiar with the matter, when Nvidia first offered credit support to neoclouds, it demanded a share of their future cloud revenue in return, and some larger neoclouds did not accept those terms. Nvidia has now shifted to providing credit support agreements with shorter maturities in exchange for a smaller share of revenue. In addition, Nvidia has set up a dedicated internal team, co-led by Huang's son-in-law Nico Caprez, to help neoclouds find data center sites with available power.

CoreWeave's Warning: Words Can't Beat the Market

Firmus's troubles are not an isolated case. The entire neocloud industry is facing the dual pressure of soaring financing costs and collapsing investor confidence, and Nvidia's verbal endorsement has proven ineffective.

Last week, Huang publicly defended CoreWeave at an event in Stockholm, saying its "cost of capital is actually coming down." But the market was unconvinced—CoreWeave's shares plunged 11.9% the next day. The trajectory of CoreWeave's borrowing costs has been the exact opposite of Huang's description: the spread on its project financing secured by chips and customer contracts widened from 225 basis points above the benchmark rate in March this year to 550 basis points in August; on the unsecured bond side, the yield on its 2032 bonds is currently about 14%, compared with about 8.5% just four months ago.

The experience of Australian data center operator Nextdc offers another warning: on Wednesday this week, the company cut its earnings guidance due to project delays caused by public opposition, and its shares plunged 41% in a single day. Just last month, Nextdc issued A$1.1 billion in convertible bonds at a low coupon of 1.75%, and its share price has now fallen to about one-third of the conversion price, leaving the securities deeply out of the money.

Faced with persistent market skepticism, Huang previously told investors that "this too shall pass" and advised investors to "buy the dip." Now Nvidia is being asked to deliver on that promise with action. For a company the market calls the "central bank of AI," injecting capital into Firmus may be just the latest step in its role as lender of last resort, but whether it can truly shore up market confidence remains to be seen. Risk Disclosure and Disclaimer

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