Bond traders and credit analysts are raising alarm over roughly $70 billion in off-balance-sheet residual-value backstops committed by Nvidia and other chipmakers to AI infrastructure financing deals. These guarantees protect lenders if borrowers exit early, but the phantom liabilities sit outside public balance sheets, obscuring true exposure. Broadcom's $35 billion Big Sky deal—where it backstopped custom AI chip financing to Anthropic—established the template now spreading across Meta, Microsoft and other hyperscaler data center debt packages.
The risk structure has intensified with Nvidia's recent $500 billion financing platform announcement: Nvidia will guarantee up to 25% of residual value on GPUs per transaction, potentially exposing the chipmaker to tens of billions if AI hardware depreciation accelerates or demand weakens. Broadcom's AI XPV platform alone could amass $370 billion in senior debt by mid-2029, per Bank of America. Rating agencies including Moody's flagged that these structures could force chipmakers to honor massive pledges during downturns, precisely when earnings come under pressure.
Market dynamics are tightening: Goldman Sachs estimates hyperscaler leverage has doubled to 1.8x in six months, and credit spreads have widened as demand for AI bonds softens. Insurance investors halved their allocation to 30-year AI bonds between Q1 and Q2. Portfolio managers warn this represents financial engineering masking underlying uncertainty about whether AI capex ever generates sufficient returns—a tail risk if the sector hits a cyclical downturn while sitting on $1.2 trillion-plus in off-balance-sheet data center debt obligations.