The Hidden Backstop
Roughly $70 billion in residual-value guarantees tied to AI chip financing now sits off the balance sheets of major technology companies, drawing fresh scrutiny from credit analysts and bond investors. The structure allows chipmakers to back customer borrowing without recording the related liabilities, relying on the strength of their own credit ratings to lower financing costs for buyers.
How the Structure Works
A typical transaction uses a special-purpose vehicle that borrows money to purchase AI chips, with repayment tied to a long-term contract with the end-user customer. If that customer stops paying, the chips are re-leased or sold; any remaining shortfall is absorbed by the chipmaker acting as guarantor. Because the guarantor treats the exposure as unlikely, the liability does not appear on the corporate balance sheet. Meta has acknowledged in filings that "the likelihood of the RVG guarantor making payments is low, so no liabilities have been recorded to date," a position that is becoming harder to defend as the scale of these deals expands.
Broadcom's Big Sky Deal
The largest single transaction identified in the current wave is Broadcom's Big Sky financing for Anthropic. Broadcom guaranteed most of a $35 billion package, with a listed backstop of $29 billion. Apollo and Blackstone acted as lenders, and the senior tranche earned investment-grade ratings, allowing Anthropic to borrow at a lower cost than it could on its own. Unlike multi-decade data center leases, chip financing deals amortize within roughly five years, narrowing the guarantor's exposure relatively quickly but concentrating risk into a short window.
Rating Agencies Tighten the Lens
Credit assessors are beginning to treat these promises as real financial exposure rather than remote contingencies. S&P Global Ratings will count Broadcom's support as contingent debt and add it to adjusted-debt calculations, a shift that could weigh on metrics used by fixed-income investors. Moody's analysts have separately warned that "the primary risk lies in multiple such transactions occurring over a short period," which could overload the market if downturn conditions arrive simultaneously.
Why the Concern Is Pro-Cyclical
Analysts at CreditSights compare Nvidia's guarantee to writing a put option that pays out precisely when prices are falling. Their warning frames the issue bluntly: "This is pro-cyclical and exacerbates boom-bust potential. The guarantee is nearly costless in the boom phase, but becomes most relevant in a severe, abrupt downturn." That asymmetry, cheap during the upswing and punitive during a contraction, is what is unsettling the bond market even as the headline volume of AI financing grows.
Nvidia's Parallel Push
Nvidia's separate $500 billion financing partnership, disclosed this week, is expected to layer tens of billions more in similar guarantees on top of the existing stock. Chief Executive Jensen Huang has said Nvidia could offer up to 25% residual-value support on a case-by-case basis, framing the company's role as helping "unlock a large amount of independent capital while maintaining disciplined risk exposure." The combined effect, analysts say, is a fast-growing pool of contingent AI liabilities that has yet to be priced by the broader credit market.
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