Nvidia reportedly financed artificial intelligence startups to ensure they purchased its processors and established data centers, offloading excess components from TSMC. The strategy emerged after major hyperscalers reduced off-the-shelf purchases in favor of custom-designed solutions. Internal friction over these arrangements peaked during an August meeting between senior finance staff and former CEO Jensen Huang. CFO and acting CEO Colette Kress explicitly warned that the subsidized cloud providers lacked the resources to sustainably afford the hardware.
Key points
Senior leadership experienced severe friction regarding the financial sustainability of f…: Senior leadership experienced severe friction regarding the financial sustainability of funding AI startups to purchase company hardware.
Finance executives warned that small-scale cloud providers could become financial dead en…: Finance executives warned that small-scale cloud providers could become financial dead ends due to their inability to genuinely afford high-end GPUs.
The controversial sales tactics were designed to engineer an appearance of scarcity while…: The controversial sales tactics were designed to engineer an appearance of scarcity while major commercial buyers built proprietary hardware.
Sources checked by our analysis pipeline: 1
Friday, November 13th 2026
NVIDIA Allegedly Engineered Scarcity By Funding AI Startups To Buy Its GPUs
Following the departure of now-former NVIDIA CEO, Jensen Huang, a new report by The Wall Street Journal (via Wccftech) has emerged alleging that NVIDIA artificially inflated the ongoing GPU and memory shortage by investing in AI startups that would go on to buy NVIDIA GPUs and build data centers. The reason behind this was to maintain the perception of ongoing high demand and to move an oversupply of semiconductors from TSMC.
The WSJ report cites an August meeting between Huang and his senior finance team, including NVIDIA's CFO and acting CEO, Colette Kress, during which Kress pushed for a reduction in circular financing agreements, in response to which Huang allegedly lay into Kress, calling her a "deer in the headlights," after she had pushed to scale back NVIDIA's $250 billion deal with OpenAI. Jensen's push for further investment into small-scale cloud providers was seemingly in response to the changing tide that saw AI hyperscalers move away from off-the-shelf components in favor of custom solutions.The…
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