Nvidia launches revenue-sharing agreements with AI cloud providers

Nvidia is pulling the plug on revenue-sharing arrangements with AI cloud providers, a move that could reshape how smaller players in the artificial intelligence infrastructure space access the company’s most coveted chips.

What Nvidia built, and why it mattered

The revenue-sharing model, formally introduced on July 1, 2026, was essentially Nvidia playing venture capitalist and hardware supplier at the same time. AI cloud providers could procure Nvidia’s GPUs with financial support from Nvidia itself. In return, Nvidia would receive both traditional hardware sales revenue and a percentage of the cloud revenue those GPUs generated.

Initial participants included Australia’s Sharon AI, which was expected to deploy up to 40,000 Grace Blackwell GB300 GPUs over six years, and Indonesia’s Firmus Technologies in Batam, where deployment could scale to 170,000 GPUs with anticipated revenue in the range of $25 to $30 billion over six years.

The backstop business was already massive

The revenue-sharing model built on prior arrangements Nvidia had struck with companies like CoreWeave and Lambda, valued at $6.3 billion and $1.5 billion respectively. Analysts characterized the approach as “vendor financing,” a term more commonly associated with telecom equipment makers than semiconductor companies.

As of the second quarter of fiscal year 2027, Nvidia’s non-hyperscale segment, internally referred to as “ACIE,” accounted for roughly 50% of the company’s data center revenue.

What this means for the AI cloud market

For the neocloud providers that were either participating in or hoping to join these programs, the halt is a significant setback. Without that support, these companies will need to secure capital elsewhere.

Investors should watch how quickly the ACIE segment’s share of data center revenue changes in coming quarters. If it drops significantly from the 50% mark, it would suggest that the revenue-sharing model was less about genuine demand from smaller providers and more about Nvidia’s financial incentives making otherwise marginal business cases viable.

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