Source: Financial Times (paywall)
Nvidia and Broadcom are structuring chip sales as financial instruments rather than outright purchases, with guaranteed buyback values that let hyperscalers keep multibillion-dollar AI infrastructure off their balance sheets. This accounting arbitrage works until it doesn't—when chips depreciate faster than guaranteed values or when the next generation makes current hardware economically obsolete, the chip makers absorb write-downs that could dwarf current margins. The practice exposes both cloud providers' desperation to manage AI capex optics and chip suppliers' willingness to bear massive tail risk to sustain their growth narrative.