GPU-collateralized debt: AI cloud financing risks alarm credit analysts

Neocloud providers like CoreWeave are borrowing billions of dollars by using graphics processing units (GPUs) as collateral. These chips rapidly lose value, and the financing structures are unprecedented in traditional credit markets. Credit analysts warn that the depreciation of GPUs, combined with opaque loan terms, could lead to systemic risks if AI demand falters or chip prices collapse. The practice has grown alongside the AI boom, with companies like CoreWeave raising debt to expand data centers. Unlike conventional asset-backed securities, GPU-collateralized loans often lack standardized valuation methods and liquidity buffers. Regulators have yet to address these novel financial instruments, raising concerns about hidden leverage in the tech sector.