Nvidia Corp (NASDAQ: NVDA) has temporarily paused its financing program that offered credit support to AI cloud providers in exchange for a share of their revenue. The company backed away from the initiative less than two months after unveiling it, citing internal concerns.

Antitrust Concerns Drive Pause

Employees reportedly told current and potential customers they were worried the program could draw antitrust scrutiny. The Wall Street Journal reported Thursday that sensitivities centered on how much control the chip giant could exert over its customers' businesses.

Nvidia stepped back from the program last week. The report added that the company could revamp it in the future or fold it into a different initiative.

Nvidia did not immediately respond to Benzinga's request for comment.

Program Structure and Context

The initiative was introduced in July, offering AI cloud providers credit support through minimum revenue guarantees. In exchange, Nvidia received a share of future revenue above a specified threshold. This allowed the company to profit from both hardware sales and a cut of customer earnings.

CFO Colette Kress described the model on Wednesday's second-quarter earnings call. "In this model, we get paid twice, once on the hardware sale and again through the share of rental revenue," she said.

Kress pushed back against claims that the arrangement amounts to "circular financing." She stated that the company's risk remains low because its computing hardware can always be redeployed to other customers.

Broader Financing Ecosystem

The revenue-sharing model is part of Nvidia's broader tools to support its customer ecosystem. This includes a nearly $50 billion investment in frontier AI labs. Additionally, Nvidia partnered with Apollo Global Management (NYSE: APO), BlackRock Inc. (NYSE: BLK), Blackstone Inc. (NYSE: BX), Brookfield Asset Management (NYSE: BAM), Goldman Sachs (NYSE: GS) and KKR & Co. Inc. (NYSE: KKR). The partnership aims to mobilize more than $500 billion in third-party infrastructure capital.

Earlier this month, investor Michael Burry called Nvidia's AI financing push a "Wall Street stunt."

Financial Performance Context

The pause comes as Nvidia posted record second-quarter revenue of $96.22 billion. This figure was above the $92.11 billion analysts expected, according to Benzinga Pro. The company guided for $108 billion in the third quarter. Achieving this guidance would mark roughly 1,730% revenue growth over four years.

Shares of the company rose 8.74% in Thursday's regular trading session to $227.98. They fell 0.83% in Friday's pre-market trade to $226.09.

What the Numbers Show

Nvidia's Q2 revenue beat analyst estimates by $4.11 billion ($96.22 billion actual vs $92.11 billion expected). The company's forward guidance of $108 billion for Q3 represents a significant expansion from the reported Q2 figure, indicating sustained high demand despite the strategic pivot away from the new revenue-sharing financing model.

Michael Burry has escalated his criticism of Nvidia Corp. (NASDAQ: NVDA), citing the company's recent 10-Q filing as evidence of risky circular financing practices within the AI sector.

The investor highlighted a specific agreement disclosed in the filing involving SoftBank’s SB Energy and OpenAI. Nvidia has entered into guarantees capped at $105 billion to provide credit support for the buildout of land, power, and shell infrastructure at SB Energy’s PORTS Technology Campus in Ohio.

The Financing Structure

According to the 10-Q, the campus involves leases for approximately 4.25 gigawatts of IT load and will exclusively host Nvidia AI infrastructure. Burry characterized this arrangement as a self-reinforcing financial loop, warning that investors are "Whistling past the graveyard" by ignoring these red flags.

Nvidia management has actively defended the strategy during its latest earnings call. CFO Colette Kress acknowledged the scale of the support but rejected the label of circular financing. CEO Jensen Huang further clarified that OpenAI will pay the lease, denying that these private credit deals artificially inflate revenue.

Market Position and Performance

Despite Burry’s bearish thesis and his maintenance of a massive short position against the broader AI ecosystem, Nvidia shares have shown resilience. The stock closed at $227.98, up 8.74% on Thursday. Year-to-date, NVDA is up 22.24%, while it has advanced 25.54% over the last year.

Burry recently purchased December Nvidia call options as a hedge against his bearish position, yet he maintains that the mechanics revealed in the 10-Q validate his long-term skepticism regarding the sector's valuation.

What the Numbers Show

The $105 billion guarantee represents a significant off-balance-sheet commitment relative to the company's operational scale. By tying this massive credit support to infrastructure that exclusively hosts Nvidia hardware, the filing reveals a deep structural dependency between Nvidia’s supply chain financing and its largest AI customers. This linkage suggests that demand visibility is partially supported by corporate credit guarantees rather than purely organic customer capital expenditure.