Nvidia has talked to insurers about taking on some of the risk of loans backed by its AI chips, the Financial Times reported on Tuesday. The talks are at an early stage and may not lead to any deals, according to the FT. TNW has not independently verified the report.

One idea would insure loans to smaller cloud providers, known as neoclouds, that pledge Nvidia chips as collateral. If a borrower defaults and the resold chips fetch less than the debt, the cover would protect the lender.

Nvidia is working with reinsurance broker Howden Re on one possible structure, the FT reported. It has given at least one insurer data on how fast its chips lose value and on the expected future value of computing power.

Nvidia has also considered joining groups of insurers, hedge funds and asset managers to back financing deals. Insurers could in turn pass some of the risk on to hedge funds and other investors, according to the FT.

Nvidia has made the case that lenders can treat its hardware like any other asset.

“AI infrastructure is an investable asset class because it’s uniquely productive, durable and fungible,” Nvidia has said, as quoted on the FT News Briefing podcast.

On the same podcast, the FT’s insurance correspondent Lee Harris said start-ups are now selling “residual value insurance”. It protects big chip buyers against the risk that their chips lose value faster than expected.

Many large traditional insurers are already at their limit for exposure to AI companies, Harris said. The global insurance industry is small next to the scale of AI investment.

Chips as collateral

The report came a day after Nvidia added a record $150bn to its share buyback. In August, the neocloud Lambda borrowed $917m to buy chips from Nvidia, which invests in it. It later signed $1bn of private debt for another Nvidia chip deal.